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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. NFAC, Delhi, (in brevity ‘the CIT (A)’) order passed u/s 250 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2019-20. The impugned order was emanated from the order of the CPC, Bengaluru, (in brevity the ld. AO) order passed u/s 154/143(1) of the Act.
The assessee has taken the following grounds:
“1.1 On the facts and In circumstances of the case and in law on the subject, the Ld C1T (Appeals), NFAC has erred In confirming the action of the ADIT, CPC of disallowance of exemption of Rs.15,15,360/- claimed u/s10(10AA)(i) by not considering employee of University as Govt Employee.
1.2 On the facts and in circumstances of the case and in law, the Ld CIT (Appeals). NFAC has erred in not accepting professor of Mohan Lal Sukhadia University as Govt Employee.
1.3 That the Ld ADIT, CPC erred in disallowance of exemption u/s 10(10AA)(i) by invoking section 154/ 143 (1) is without lawful assumption of jurisdiction as per law.
1.4 That the Ld ADIT, CPC erred in passing of an order u/s 154 / 143(1) without providing an opportunity is against the principles of natural justice and liable to quash.
2 The Ld CIT(A), NFAC further erred in upholding the disallowance of set off of Short Term Capital Loss by Short and Long Term Capital Gains as provided in section 70 of the Act.
3 The appellant craves leave to add, alter, amend, modify and/or delete all or any of the grounds of the appeal on or before the final hearing, if necessary.”
Brief fact of the case is that the assessee is an employee and working as professor at Mohan Lal Sukhadia University, Udaipur (in short MLSU). After the superannuation, assessee received leave encashment amount of Rs.18,15,360/-. During filing of return the assessee claimed exemption in full amount u/s 10(AA) (i) of the Act. The return was processed U/s 143(1) by accepting the claim of deduction. Further, the revenue has passed an order U/s 154 and reduced the claim of exemption u/s 10(AA) (i) amount to Rs.3 lac. The amount to Rs.15,15,360/- was rejected and added back with the total income of the assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A) by challenging the order passed u/s 154/143(1) of the Act. But the assessee remained unsuccessful. Being aggrieved assessee filed an appeal before us.
The ld. AR for the assessee filed written submissions which are kept in the record. The ld. AR argued that that Mohan Lal Sukhadia University is enacted by the Rajasthan Legislature and promulgated w.e.f. 26/10/1963 as The Mohan Lal Sukhadia University Act,1962. It is also registered under the university Grant Commission Act, 1959 (in short UGC). it will be treated as the Government entity. Accordingly, the exemption u/s 10 (AA) will be applicable to the assessee in full amount as the assessee is to be treated as the employee of the State Government. The ld. AR submitted that the entire leave encashment will be exempted which was duly received during superannuation.
4.1. The ld. AR argued and relied on the order of the Hon’ble High Court of Madras in the case of Dr. P. Balasubramanianv.Chief Commissioner Income-tax (TDS) [2022] 142 taxmann.com 25 (Madras). The relevant paragraphs are reproduced as below: - “28. That apart, there are a slew of decisions of the Income-tax AppellateTribunal, wherein in the context of section 10(10AA) of the Act, employees of several Universities, such as the Haryana Agricultural University and Mahatma Gandhi University, have been held to be holding civil posts under the State Government. The decisions are (i) Ram Kanwar Rana v. ITO [2016] 71 taxmann.com 54/159 ITD 431 (Delhi - Trib.), (ii) ITO (TDS) v. Mahatma Gandhi University [2019] 107 taxmann.com 186/73 ITR (Trib.) 44/177 ITD 508 (Cochin - Trib.), (iii) Dev Raj Sood v. ITO [ITA No. 905/Del/2017, dated 30-5- 2017] (iv) Mahatma Gandhi University case (supra) and (v) Indra Kumari Bajaj v. ITO [ITA No. 2735/Del/2017, dated 4-12-2019].
In light of the detailed discussion as above, I have no doubt in my mind that the petitioners, employees of Tamil Nadu Agricultural University are Government servants, entitled to the benefit of exemption under section 10(10AA)(i) of the Act. Impugned circular dated 17-2-2015 and consequent communications dated 30-10-2018, 19-3-2019 and 14-11-2016 issued to the petitioners by the University, are contrary to law and are set aside.
These Writ Petitions are allowed. No costs. Connected Miscellaneous Petitions are closed.”
The ld. DR vehemently argued and first invited our attention in appeal order page 3 to 4 which are reproduced as below:
“5. Decision on ground of appeal;
5.1. Shri Chhitar Mai Jain is retired professor from Mohanlal Sukhadia University. The leave salary received at time of retirement, is Rs.18,15,360/- which has been restricted to Rs 3,00,000/- treating as non- government employee. For ready reference, I am hereby reproducing the section 10(10aa) as under:
In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included:
(10AA) (i) any payment received by an employee of the Central Government or a State Government as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise;
(ii) any payment of the nature referred to in sub-clause (/) received by an employee, other than an employee of the Central Government or a State Government, in respect of so much of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise as does not exceed ten months, calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement whether on superannuation or otherwise, subject to such limit as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the limit applicable in this behalf to the employees of that Government:
Provided that where any such payments are received by an employee from more than one employer in the same previous year, the aggregate amount exempt from income-tax under this sub- clause shall not exceed the limit so specified:
Provided further that where any such payment or payments was or were received in any one or more earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause shall not exceed the limit so specified, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years.
Explanation.—For the purposes of sub-clause (ii),— the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired;
5.2. However, as the appellant has not provided the required details to prove that he is a government employee. The addition made by the Assessing Officer is upheld and Ground No.1 and 2 are dismissed.”
We heard the rival submission and considered the documents available in the record. In argument, the ld. AR try to establish that the assessee is an employee of State Government. But revenue has treated the assessee not as the government employee. Accordingly, the exemption allowed Rs. 3 lacs as per rule provided in the Income Tax Rule 1962. We respectfully relied on the order of the Dr. P. Balasubramanian (supra). The MLSU is guided by the UGC Act and act of State of Rajasthan. The issue was not verified any of the authority during both the proceedings. But on other side the assessee had failed to submit supporting documents before the ld. CIT(A) to establish the status MLSU. The revenue was deniedadjudicating the documents relied by the assessee. The ld. AR is unable to show any evidence that the documents, relied by the asseessee was filed before the revenue during the proceeding. We are not infringing the right of the revenue to verify the factual aspect in the assessee’s case. In our considered view, we remit back the matter to the file of the ld. CIT(A) for verification of documents relied by the assessee. Needless to say, the assessee should get the reasonable opportunity of hearing in set aside appeal proceedings.
In the result, the appeal of the assessee bearing is allowed for statistical purpose.
Order pronounced in the open court on 22.11.2023