VIMALESH JAIN,AJMER vs. COMMISSIONER OF INCOME-TAX (APPEALS), BHILWARA

PDF · subscribers
ITA 75/JODH/2026Status: DisposedITAT Jodhpur07 August 2026AY 2019-206 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the enhanced exemption limit of Rs. 25,00,000/- as per CBDT Notification No. 31/2023 applies to bank employees, following various coordinate bench decisions. The assessee is eligible for exemption of the entire leave encashment received.

What were the facts?

The assessee, a bank employee, received leave encashment of Rs. 11,37,348/- upon superannuation. The CPC initially allowed the full exemption but later restricted it to Rs. 3,00,000/- under Section 154, citing a distinction for non-government employees.

What were the issues?

The primary issue was whether the enhanced exemption limit for leave encashment under Section 10(10AA) applies to employees of nationalized banks, considering CBDT notifications.

Which sections of the Income-tax Act were involved?

Section 10(10AA),Section 154,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE

For Appellant: Shri Vimalesh Jain, (Physically)
For Respondent: Ms. Nidhi Nair, Addl. CIT-DR (Physically)

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR

BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE ACCOUNTANT MEMBER

ITA No. 75/Jodh/2026 (Assessment Year 2019-20)

Vimalesh Jain Commissioner of Income Tax Vardhman Gali No. 6 Plot No. 5, (Appeals), Ramnagar, Vs. ITO Wd-1 Bhl., Shastri Nagar, Ajmer, Rajasthan-305004 near Kawa Khera Chauraha, PAN No. AAQPJ 4354G Bhilwara - 311001

Assessee by Shri Vimalesh Jain, (Physically) Revenue by Ms. Nidhi Nair, Addl. CIT-DR (Physically) Date of Hearing 03 / 08 / 2026. Date of Pronouncement 07 / 08 / 2026.

ORDER Per: Shri Saktijit Dey, Vice President :

This is an appeal by the assessee against order dated 20-11-2025 of learned Additional Commissioner of Income Tax (Appeal), Ahmedabad, for the Assessment Year 2019-20.

2 ITA No. 75/Jodh/2026 (Assessment Year: 2019-20) 2. The solitary issue arising in the appeal relates to the limitation on exemption under Section 10(10AA) of the Income Tax Act, 1961 (in short, ‘the Act’), relating to leave encashment.

3.

Briefly the facts are, the assessee is a resident individual and was under employment with Union Bank of India. Upon his superannuation on 30th April 2018, the assessee received various retiral benefits, including leave encashment, amounting to Rs.11,37,348/-.In the return of income filed by the assessee, the full amount was claimed as exempt under Section 10(10AA) of the Act. In the intimation issued under Section 143(1) of the Act, assessee was granted refund as claimed. However, subsequently, the Centralized Processing Centre (CPC), passed an order under Section 154 of the Act, limiting the exemption under Section 10 (10AA) of the Act to an amount of Rs.3,00,000/-, which resulted in a demand of Rs.2,22,580/. Challenging the order passed under Section 154 of the Act, assessee filed an appeal before learned First Appellate Authority. Referring to the provisions contained under Section 10(10AA) of the Act and certain notifications issued by Central Board of Direct Taxes (CBDT), learned first appellate authority held that there is a distinction in the limit of exemption under Section 10A(10AA) of the Act, with regard to leave encashment between the Central and State Government employees and the non-government employees. He observed, in case of non- government employees, restriction provided under Section 10(10AA) of the Act,

3 ITA No. 75/Jodh/2026 (Assessment Year: 2019-20) would apply. Hence, he upheld the disallowance made in the order passed under Section 154 of the Act.

4.

Before us, learned counsel appearing for the assessee submitted that various Benches of the Income Tax Appellate Tribunal (ITAT) have decided the issue in favour of the employees of various banks, holding that the enhanced limit of Rs.25,00,000/- as per Notification No. 31/2023 dated 24-05-2023 issued by CBDT, would apply to bank employees. In this context, he drew our attention to order dated 18-06-2025 passed in ITA No. 175/Agra/2022, in case of ‘Vijay Kumar Jain vs. ITO’, and several other decisions attached to the written submission. Whereas, learned Departmental Representative submitted that in absence of any specific notification/ circular issued by the CBDT, the limit prescribed under Section 10(10AA) of the Act would apply.

5.

Having considered rival submissions and perused the material on record, we find that the issue is squarely covered in favour of the assessee by various decisions of the coordinate Benches. In case of ‘Vijay Kumar Jain vs. ITO’ (Supra), the coordinate Bench while dealing with an identical issue, has held as under:

“10. We find that the claim of assessee relates to the assessment year 2019-20. We further find that similar question has been answered by the co-ordinate Bench of Jaipur Tribunal vide order dated 27.06.2023 passed in ITA No. 408/JPR/2022 for A.Y. 2020-21 in the case of Ram Charan Gupta vs. ITO. The relevant paras 8 and 8.1 are reproduced as under :

4 ITA No. 75/Jodh/2026 (Assessment Year: 2019-20) “8. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee relying the decision of Hon’ble Delhi High Court has issued a notice to the Union of India in the case of Kamal Kumar Kalia & Ors. Vs. Union of India & Ors in WP(C) 11846/2019 dated 08.11.2019 wherein the court has given following directions :- “8. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay- scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10(10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect. 9. Issue notice, learned counsel for the respondents accepts notice. Respondents should file counter affidavits be filed within six weeks. Rejoinder thereto, if any, be filed before the next date. 8.1 Recently the Central Board of Direct Taxes Suomotu revised the limit for deduction u/s 10(10AA) of the Act and the revised limit now stood at Rs. 25,00,000 as specified vide notification no. 31/2023 issued by the ministry of finance. Since the leave encashment amount as claimed by the assessee is amount to Rs. 6,97,100/- which is below the revised limit of leave encashment exempt prescribed by the Board, the assessee is eligible to claim of deduction of said Rs. 6,97,100/-. Based on these observations the ld. AO is directed to allow the claim of the assessee u/s. 10(10AA) of the Act within the revised limit as prescribed. In terms of these observations the appeal of the assessee is allowed.” 11. Another coordinate Bench of Jaipur Tribunal vide order dated 31.10.2023 passed in ITA No. 385/JP/2023 for A.Y. 2020-21 in the case of Govind Chhatwani vs. CIT(Appeals), has followed Ram Charan Gupta (supra) and held that the assessee was eligible for the claim of deduction in respect of the exemption of his leave encashment

5 ITA No. 75/Jodh/2026 (Assessment Year: 2019-20) exceeding Rs.3,00,000/-, as the CBDT Notification No. 31/2023 dated 24.05.2023 has raised the limits to Rs.25,00,000/-. 12. It is established principle of law that a circular of CBDT, no doubt, has the force of law, can even supplant the law in case where it is beneficial to the assessee and can mitigate or relax the rigors of law. The powers of CBDT in issuing circular for general guidance are subject to two important conditions. One is that it does not entitle the Income-tax authority including the Board to issue instructions or circulars contrary to the substantive provisions of law or curtailing the relief, to which the assessee is otherwise entitled under law. The circular cannot, therefore curtail the benefit conferred on the assessee or be contradictory to the Act. Hon’ble Apex Court in Union of India vs. Wood Paper Limited AIR 1991 SC 2049 has held that the condition regulating the computation of benefit should be interpreted liberally. 13. In view of this legal position, we are in respectful agreement of what has been held by the afore cited coordinate Jaipur Benches of this Tribunal as noted hereinabove. We accordingly answer the aforesaid question in favour of the assessee and against the Revenue and hold that the appellant/assessee is eligible to claim deduction of Rs.7,51,755/- in view of limits raised to Rs.25,00,000/- vide Notification No. 31/2023 dated 24.05.2023. The appeal is thus liable to be allowed.”

6.

The other decisions placed before us by the assessee express similar view. Hence, respectfully following the decisions of the coordinate Benches, we direct the Assessing Officer to allow exemption claimed under Section 10(10AA) of the Act by the assessee, in respect of the entire leave encashment received. Accordingly, appeal is allowed.

7.

In the result, appeal is allowed.

Order pronounced in open court on 07/08/2026.

6 ITA No. 75/Jodh/2026 (Assessment Year: 2019-20)

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) Dated : 07/08/ 2026. Aks/- True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

More judgments on Section 10(10AA)

All 498 judgments and leading authorities on Section 10(10AA) →

Recent GST High Court judgments

Search GST case law →