IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member ITA No. 129/Del/2025 : Asstt. Year: 2021-22 Shyam Sunder Sahni, Vs Asstt. Director of Income Tax, B-2/143, Janakpurii, New Delhi -58 CPC, Bengaluru (PAN: AYOPS8172M)

(APPELLANT) (RESPONDENT)

PAN No. AQIPS1923N Assessee by : None Revenue by : Sh. Sanjay Kumar, Sr. DR Date of Hearing: 21.04.2025 Date of Pronouncement: 21.04.2025

ORDER

This assessee’s appeal for Assessment Year 2021-22, arises against the CIT(A)/NFAC, Delhi’s DIN & Order No. ITBA/APLS/S/250/2024-25/1070768151(1) dated 29.11.2024, in proceedings u/s 143(1) r.w.s. 264 of the Income Tax Act, 1961 (in short “the Act”).

2. Case called twice. None appears at the assessee’s behest.

He is accordingly proceeded ex-parte.

3. It transpires during the course of hearing that assessee’s sole substantive ground raised in the instant appeal challenges both the learned lower authorities’ action denying section 10(10AA) leave encashment exemption thereby holding that he is not entitled for the same since employed with Canara Bank and not a Central or State Government Department.

4. It is next noticed that recently the tribunal in Ram Charan Gupta, Jaipur vs. ITO, Ward 4(2), Jaipur, in ITA No. 408/JPR/2022 dated 27.6.2023 has already rejected the Revenue’s very stand as under:-

“3. Succinctly, the fact as culled out from the records is that the assessee who has retired is a bank employee and has claimed an amount of Rs. 6,97,100/- being leave encashment received as exempt u/s 10(10AA) of the Act. However, the AO, CPC while processing the return of income has allowed exemption of only Rs. 3,00,000/- as against 100% exemption claimed by the assessee. Hence, this appeal.

4. Aggrieved from the order of the AO, CPC assessee preferred appeal before the ld. CIT(A). A propose to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:

" 5.2.2 I have considered the facts of the case as also the submissions of the appellant. The appellant is a retiree from Bank and not any government organization. Here, reliance is placed on the decision of Hon'ble Delhi High Court in the case of Kamal Kumar Kalia v/s Union of India (2020) 268 Taxman 398/313 CTR 779 (Delhi) (HC) dated 08.11.2019, where the issue under consideration was whether the appellant being employee of Public sector undertaking (PSU) Ram Charan Gupta vs. ITO and Nationalised banks can be treated as government employee from the purposes of exemption u/s 10(10AA) of the I.T. Act. In the said case, the Hon'ble High Court held as under:-

"The petitioner, who were the employees of the Public Sector undertaking and Nationalised banks, filed writ contending that they were discriminated against Central Government and State Government. The Central Government and State Government employees are granted complete exemption in respect of the cash equivalent of the leave salary for the period of earned leave standing to their credit at the time of their retirement. Dismissing the petition the Court held that merely because Public Sector Undertaking and Nationalised Banks are considered as State under article 12 of the Constitution of india for the purpose of entertainment of proceedings under Article 226 of the Constitution and for enforcement of fundamental right under the Constitution, it does not follow that the employees of such Public Sector Undertaking, Nationalised Banks or other institutions which are classified as 'State' Assume the status of Central government and State Government employees. Accordingly the petition is rejected."

5.2.3 Further, in the case of KPTCL Davangere V/s ITO (2018), the Hon'ble ITAT, Bangalore vide its order in ITA No. 170 ITD 587 (Bang.) (Trib.) has held that assessee being a statutory corporation its employees could not be regarded as State or Central Government employees and therefore exemption under S. 10(10AA)(i) was not available and assesse was liable to deduct tax at source