Leave encashment to Volunatry retired BSNL Employees

This query is : Resolved

Vijaya Kumar (Querist)
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18 January 2021 Sir, I took VRS from BSNL on 31-01-2020. I was appointed in the Department of Telecom 0n 28-05-1983 and got absorbed into BSNL, a PSU on 01-10-2000. My accumulated Earned leave was 150 days as on 30-09-2000. After my Voluntary retirement BSNL paid Leave salary encahsment for 300 days ( 150 days of DOT period + 150 days of BSNL period accumulated leave). And while making the leave encashment payment BSNL allowed exemption for the DOT period leave accumulated and Rs.3 Lakh was exempted against leave salary paid for BSNL period and for balance IT recovered. My question is that whether the DOT period leave encashment is fully exempt from IT. Some of my retired colleagues have started getting notices from IT Department to pay for the DOT period leave salary. Is this correct ? If DOT period leave is exempted from IT please send me a copy of such order.

Thanking you

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 January 2021 Yes, it's right as you retired as PSU employee only 3 lacs is exempted towards leave encashment including DOT period.

N Muralidharan

N Muralidharan (Expert)
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31 May 2021 IN THE I NCOME TAX APPE LL AT E TRIBUN AL “SMC” BENCH, MUMB AI
श्री महावीर स हिं , न्याययक दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JUDICIAL MEMBER
Aay akr ApIla sa M ./ ITA No. 3261/Mum/2018
(i n aQa -arNa b aY a - / Assessment Year 2014-15)
Mr. Babulal Patel
C-604, Gokul Tower, Thakur
Complex, Kandivali (East ),
Mumbai-400 101
Vs.
The Income Tax Of f icer,
Ward 34(1)(2) , Bandra East ,
Mumbai
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)

.... I am of the view that as per the provisions of section 10(10AA)(i) of the
Act, the assessee is entitled for exemption on the amount of leave
encashment of leave earned during the period before absorption in MTNL
as per section 10(10AA)(i) of the Act as applicable to Central Govt.
because before that date he was employee of Govt. of India that the
Central Government. The amount of leave encashment in respect of leave
accrued after absorption in MTNL will be governed by the exemption as
per section 10(10AA)(ii) of the Act. I find that the facts are clearly in favour
of assessee and for 263 days of leave as on the date of absorption was
available to the assessee, which was earned and unutilized from
Government service i.e. Central Government and will be governed by
10(10AA)(i) of the Act. The balance 37 days of leave earned is from MTNL
and will be governed as per the provisions of section 10(10AA)(ii) of the
Act. Accordingly, I allow the appeal of the assessee and direct the AO to
recompute the exemption proportionately as directed above.
10. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 05.02.2019.

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