THANIKKACHALAM J.

At the instance of the Revenue for the assessment year 1974-75, the Tribunal referred the following question for the opinion of this court, under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act")

"Whether, on the facts and in the circumstances of the case, the sum of Rs. 22, 730 received on account of encashment of unavailed leave by the assessee at the time of retirement was not taxable under the Income-tax Act, 1961 ?" *

The assessee is an individual, who was earning salary from his employment from the Madras Fertilizers Ltd. During the previous year ended March 31, 1974, corresponding to the assessment year 1974-75, the assessee retired. On retirement, he received a sum of Rs. 22, 730 by encashment of the unutilised leave standing to his credit. The assessee filed a return showing an income of Rs. 62, 572 including the sum of Rs. 22, 730 and claiming the spread over of this amount under section 89(1) of the Act. The assessment was originally completed under section 143(1)(a) disallowing the claim. The assessee then applied under section 143(2)(a) objecting to the assessment of the sum of Rs. 22, 730. But the Income-tax