SMT. INDRA KUMARI BAJAJ THROUGH L/H SH. THAKUR DASS BAJAJ,HISAR vs. ITO, HISAR

The appeal is filed by the assessee, against the order dated 29.01.2016 passed by the CIT(A), Hissar for A.Y. 2011-12.

The grounds of appeal are as under:

Return declaring an income of Rs. 13,13,930/- was filed on 29.07.2011 which was processed u/s 143(1) of the Income Tax Act, 1961 on the returned income. The assessee was employee of the Chaudhary Charan Singh Haryana Agricultural University, Hisar, a State University, established under ‘The Haryana and Punjab Agricultural Universities Act, 1970’ and notified under University Grants Commission. The assessee retired on 31.03.2010. After retirement during the assessment year 2011-12, the assessee received Gratuity amounting to Rs.6,50,000/- and Leave Encashment amounting to Rs. 449050/-, and claimed exemption u/s 10(10)(i) and 10(10AA)(i) of the Income tax Act, 1961. Gratuity and leave encashment amount was claimed exempt income in the return being State University and its employees are treated at par with the State Govt, employee for all purposes, as per section 10(10)(i) and 10(10AA)(i) of the Income tax Act, 1961. In response to notice u/s 148, appellant had submitted reply that original return already submitted be treated in response to notice u/s 148. Thereafter, notice was issued for reassessment u/s 147/143(3) of the Income tax Act, 1961 and reassessment was made by the Assessing Officer vide order dated 30.01.2014. The Assessing Officer restricted the exemption on account of Gratuity and leave encashment u/s 10(10)(i) and 10(10AA)(i) of the Act and made the addition in the returned income as per detail given below:-

Being aggrieved by the Assessment Order, the assessee preferred appeal before the CIT(A). The appeal was dismissed on the ground that the assessee was an employee of Chaudhary Charan Singh Haryana Agricultural University, which is not a State Govt.

The Ld. AR submitted that the assessment was framed u/s 143(1) of the Income tax Act, 1961. No notice u/s 143(2) for assessment was issued within six months from the end of the assessment year. Thereafter, notice u/s 148 of the Income Tax Act, 1961 was issued on 03-10-2013 without service of copy of reasons initiated before proceedings u/s 147 of the Income tax Act, 1961. In response to notice u/s 148, the assessee had submitted reply that original return already submitted be treated in response to notice u/s 148. Thereafter, notice was issued for reassessment u/s 147/143(3) of the Income tax Act, 1961 and reassessment was made by the Assessing Officer vide order dated 30-01-2014. Gratuity and leave encashment amount was claimed exempt income in the return being State University and its employees are treated at par with the State Government, employee for all purposes, as per section 10(10)(i) and 10(10AA)(i) of the Income Tax Act, 1961. The assessee retired from service before 24.05.2010. The Ld. AR submitted that this issue is considered by the Tribunal in number of cases wherein the Tribunal has granted relief in favour of assessees who were working in the Chaudhary Charan Singh Haryana Agricultural University, Hisar, a State University, established under ‘The Haryana and Punjab Agricultural Universities Act, 1970’ and notified under University Grants Commission. The Ld. AR relied upon the decision of the Tribunal in case of Ram Kanwar Rana vs. ITO being order dated 16.06.2016.

The Ld. DR relied upon the order of the CIT(A) and the Assessment Order.

We have heard both the parties and perused all the relevant material available on record. As regards to Ground Nos. (i) to (iii) relating to initiation of reassessment proceedings is not pressed by the Ld. AR, hence dismissed. It is pertinent to note that the assessee was an employee of Chaudhary Charan Singh Haryana Agricultural University, Hisar, a State University, established under ‘The Haryana and Punjab Agricultural Universities Act, 1970’ and notified under University Grants Commission. The Tribunal in case of Ram Kanwar Rana (supra) held that the exemption u/s 10(10)(i) and 10(10AA)(i) of the Act are available to the assessee in respect of the arrears of gratuity and dismissed the grounds about the initiation of the re-assessment. Similar view has been taken in several decisions including Raghubir Singh Panghal vs. ITO in ITA No. 1308/Del/2016. As in the present case also the assessee is found to be an employee holding a civil post under a State, therefore, the provisions of Section 10(10)(i) of the Act are attracted in this case and the assessee is entitled to exemption in respect of gratuity amount received in total upto Rs. 10 lac which covers a sum of Rs. 6,50,000/- received during the year. As regards the arrears of leave encashment, it is also on the same footing to that of exemption claimed under Section 10(10)(i). Therefore, the assessee is entitled for the exemption claimed under Section 10(10)(i) and 10(10AA)(i) of the Act. The CIT(A) as well as the Assessing Officer was not right in disallowing the same. Thus, Ground No. (iv) is allowed.

In result, appeal of the assessee is partly allowed.