RANJIT SINGH GREWAL,BHIWANI vs. ACIT, BHIWANI

The only issue pressed by the ld. AR in this appeal is against the denial of exemption in respect of the amount received by the assessee towards arrears of gratuity at Rs.6,50,000/-.

Briefly stated, the facts of the case are that the assessee was an employee of Krishi Kalyan Kendra, Bhiwani which was affiliated to Haryana Agricultural University, Hisar (hereinafter called HAU) and retired from service on 30.06.2007. Original return for the previous year relevant to the assessment year under consideration declaring total income of Rs.9,02,940/- was filed, which was processed u/s 143(1) of the Act. Later on the assessee revised his return of income on 04.07.2011 declaring a further income of Rs.1,52,398/- The AO initiated re-assessment proceedings on the premise that the assessee had wrongly claimed exemption u/s 10(10) in respect of the arrears of gratuity. He observed that gratuity was exempt up to the limit of Rs.3,50,000/- only in the case of the assessee, which limit stood exhausted in the earlier year at the time of their receipt. He further noticed that exemption limit was enhanced to Rs.10 lac for the persons retiring from service on or after 24.5.2010. Since the assessee retired before this cut-off date, the AO opined that the extended benefit of exemption was not available to the assessee. He jettisoned the claim of the assessee for exemption u/s 10(10) of the Act and held that the correct section applicable was 10(10)(iii). Since the assessee was an employee of HAU, the AO held that such employees could not be termed as Government employees and, hence, the benefit u/s 10(10)(i) was not available to the assessee. Resultantly, he made addition towards the amount of arrears of gratuity received at Rs.6,50,000/-. The ld. CIT(A) echoed the view taken by the AO that the assessee was not a `holder of civil post under the State Government’ and hence not eligible for exemption u/s 10(10)(i). Further, the assessee was held to be not covered u/s 10(10)(ii) as he did not receive any gratuity under the Payment of Gratuity Act, 1972. That is how, he held that the employees of the HAU were covered u/s 10(10)(iii) of the Act, for which there is a limit on the exempt gratuity amount, which stood exhausted by the assessee in earlier year. Since the assessee was employed before 24.5.2010, the Notification issued by the CBDT enhancing the limit of 3 Rs.10 lac on gratuity u/s 10(10)(iii) was held to be not applicable. The assessee is aggrieved against the confirmation of denial of exemption made by the ld. CIT(A).

I have heard the rival submissions and perused the relevant material on record. It is observed that the Delhi bench of the tribunal in Shri Ram Kanwar Rana vs. ITO, Ward-3, Hisar in has allowed exemption, inter alia, in respect of the arrears of gratuity and dismissed the grounds about the initiation of re- assessment. Similar view has been taken in a host of decisions including the case of Raghubir Singh Panghal vs. ITO in ITA No.1308/Del/2016.

In the result, the appeal is partly allowed.