HARSHAD VASUDEO CHAUDHARI,THANE vs. CIRCLE 3, THANE, THANE

आदेश / ORDER

PER:NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER:

This appeal has been preferred by the Assessee against the order dated 24.12.2025, impugned herein, passed by the National Faceless Appeal Centre (NFAC), New Delhi/Ld. Commissioner of Income Tax(Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y.2021-22.

“MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION New Delhi, the 24th May, 2023

(INCOME-TAX)

S.O. 2276(E). In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of Section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether on superannuation or otherwise, hereby specifies the amount of Rs.25,00,000 (Rupees Twenty-five Lakhs 2

only) as the limit in relation to employees mentioned in the said sub-clause who retire, whether on superannuation or otherwise.

[Notification No.31/2023/F. No.200/3/2023-ITA-1]

SOURABH JAIN Under Secretary

Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving retrospective effect to this notification.

5.6 On perusal of CBDT Notification No.31/2023 dated 24.05.2023, it is evident that the exemption limit for leave encashment on retirement in the case of non-government employees was enhanced from Rs.3 Lakhs to Rs.25 Lakhs. The enhanced limit is applicable to employees who retired, whether on superannuation or otherwise, on or after 01.04.2023.

5.7 Since the aforesaid notification came into force with effect from 01.04.2023, the same is not applicable to the appellant's case. Accordingly, it is held that the CPC has rightly restricted the exemption under Section 10(10AA) of the Act to Rs.3,00,000/-. Therefore, the grounds raised by the appellant are dismissed.

6.0In the result, the appeal is dismissed.”

Govt. employees have been upwardly revised and there is rise in inflation”, taken cognizance and issued notice to the Union of India and ors. by observing and holding as under:

8.We further observe that the Hon'ble Coordinate Bench of the Tribunal at Mumbai in Balakram Hiranand Lohana, Mumbai vs. ADIT, CPC, Bangalore (ITA No.3791/Mum/2025), decided on 31.10.2025, considered an identical issue and, by following the decision of the Hon'ble Coordinate Bench in Govardhan Deepachand Bhambhani Vs. ITO [2025] 177 taxmann.com 220 (Ahmedabad-Trib.), and applying the doctrine of stare decisis, allowed the identical claim of the Assessee, who had retired from Bank of Baroda on 31.05.2019i.e. prior to the above CBDT Notification.

applying the enhanced exemption limit of Rs.25 Lakhs, under Section 10(10AA) of the Act.

“23. I have noted above the contention of the Ld. Counsel for the assessee before me of various Co- Ordinate Bench decisions of the ITAT, in as much as 22 cases, holding that the limit of exemption of leave encashment as per Section 10(10AA) of the Act applicable for the impugned year would be Rs.25 lacs. The Ld. Counsel for the assessee submitted the list of the said decisions vide submission dated 25-11- 2025 as under: -

Sr No. Name of the Appellant and Name of the Asst. ITAT Bench Date of ITA No. Employer Year order

21 Mr. Vijay Pal Gupta ITA Canara Bank 2021-22 Delhi 29.10.2025 No.5915/DEL/25

11.Admittedly, the exemption limit under Section 10(10AA)(ii) of the Act had not been enhanced since 1998. Accordingly, the Hon'ble Delhi High Court in Kamal Kumar Kalia & Ors. (supra) found substance in the grievance raised by the petitioners and issued notice to the Union of India and others in W.P.(C) No.11846/2019 vide order dated 08.11.2019. It appears that, may be, the CBDT taking cognizance of the said observations, subsequently enhanced the exemption limit from Rs.3 Lakhs to Rs.25 Lakhs vide Notification No.31/2023 (supra). Therefore, the substantial delay in enhancing the exemption limit deserves to be interpreted liberally in favour of the Assessee. Consequently, various

Courts and Coordinate Benches of the Tribunal have extended the benefit of the enhanced exemption limit, even to cases pertaining to the period, prior to the issuance of the said notification.

12.Thus, in view of the aforesaid discussion and analysis, we have no hesitation in allowing the exemption claimed by the Assessee up to the limit of Rs.25 Lakhs, or to the extent actually claimed, subject to the maximum limit of Rs.25 Lakhs. However, the claim shall be subject to verification by the Jurisdictional Assessing Officer, within one month from the date of receipt of this order.

13.Thus, in the result, the appeal filed by the Assessee is allowed in the above terms.

Order pronounced in the open court on 29.06.2026.

Sd/- Sd/- ARUN KHODPIA NARENDER KUMAR ACCOUNTANT MEMBER CHOUDHRYJUDICIAL MEMBER (Aditi Pandare) Private Secretary Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai