HARVENDER KUMAR MIGLANI,SAHARANPUR vs. I.T.O., SAHARANPUR

ITA 8107/DEL/2026Status: DisposedITAT Delhi25 September 2026AY 2020-217 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal. The Tribunal noted that the assessee's sole substantive ground challenged the denial of full leave encashment exemption under Section 10(10AA). The Tribunal referred to its own recent decision in Ram Charan Gupta vs. ITO, Jaipur, which had rejected the Revenue's stand on a similar issue. The Tribunal also took into account the Delhi High Court's decision in Kamal Kumar Kalia v/s Union of India, which, while dismissing a writ petition, clarified that being considered 'State' under Article 12 does not equate to being a Central or State Government employee for Section 10(10AA). However, the Tribunal crucially observed that the Central Board of Direct Taxes (CBDT) had suo motu revised the limit for deduction under Section 10(10AA) to Rs. 25,00,000 vide notification no. 31/2023. Since the assessee's claimed leave encashment amount of Rs. 6,97,100 was below this revised limit, the assessee was eligible for the full deduction. The AO was directed to allow the claim within the revised limit. The Tribunal adopted the reasoning from the extracted detailed reasoning mutatis mutandis.

What were the facts?

The assessee, Harvender Kumar Miglani, filed an appeal for Assessment Year 2020-21 against an order passed by the Commissioner of Income Tax (Appeals)/Addl. JCIT(A)-3 on June 30, 2026. The appeal arose from proceedings under Section 143(1) of the Income Tax Act, 1961. The core dispute concerns the assessee's claim for leave encashment exemption under Section 10(10AA). The Assessing Officer (AO) and the CIT(A) had restricted the exemption to Rs. 3,00,000, holding that as an employee of Punjab National Bank, the assessee was not a Central or State Government employee entitled to full exemption. The assessee contended that the initial processing under Section 143(1) was done without providing an opportunity to be heard and that the disallowance of Rs. 3,97,100 was unjustified.

What were the issues?

1. Whether the assessee, an employee of Punjab National Bank, is entitled to full exemption on leave encashment under Section 10(10AA) of the Income Tax Act, 1961, or is limited to Rs. 3,00,000 as held by the lower authorities. Assessee's Contentions: - The assessee argued that the initial processing under Section 143(1) was done without providing an opportunity of being heard, violating principles of natural justice. - The assessee claimed that Punjab National Bank is regulated by by-laws made by the Central Government, and therefore, it should be treated as a Central Government organization, making the assessee a government employee eligible for full exemption. - The assessee relied on the fact that the definition of 'non-government employee' in Section 10(10AA) does not specifically exclude bank employees, and nationalized banks are controlled by the Central Government. - The assessee also referred to a recent budget speech and notification regarding an increase in the exemption limit. Revenue's Contentions: - The revenue relied on the findings of the lower authorities, which held that employees of nationalized banks are not government employees for the purpose of Section 10(10AA) exemption. - The revenue cited decisions of the Delhi High Court in Kamal Kumar Kalia v/s Union of India and the ITAT Bangalore in KPTCL Davangere V/s ITO, which held that PSU and nationalized bank employees are not government employees for this purpose.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI SATBEER SINGH GODARA

PER SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER:

This appeal for assessment year 2020-21 is filed by the assessee against the order of Commissioner of Income Tax (Appeals)/Addl. JCIT(A)-3 (for short, “CIT(A)”), Hyderabad’s DIN & order No. ITBA/APL/S/250/2026-27 passed on 30.06.2026 The Assessee has raised the following grounds of appeal, involving proceedings u/s 143(1) of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.

Heard both the parties. Case file perused

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