ITAT allows exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees

ITAT allowed increased exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees in view of CBDT retrospective notification.

In a recent judgment, ITAT Lucknow allowed benefit of CBDT retrospective notification enhancing the exemption u/s 10(10A) to Rs. 25 lakhs to non-government employees also.

ABCAUS Case Law Citation:
5074 (2026) (03) abcaus.in ITAT

In the instant case the appellant assessee had challenged the order passed by the CIT(A) in confirming the action of CPC in restricting exemption under section 10(10AA) to Rs. 3,00,000.

The appellant assessee was an individual and a retired employee of a Nationalised Bank (PNB). The assessee filed his return of income for the A.Y. 2020-21 claiming the whole amount of leave encashment received u/s 10(10AA) of the Income Tax Act, 1961 (the Act).

While processing the return filed by the assessee, the Assessing Officer (AO) restricted the same to Rs. 3,00,000/- and added to the total income. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) who vide impugned appellate order dismissed the assessee’s appeal.

During the course of hearing before the Tribunal, the assessee submitted that CBDT had issued Notification No. 31/2023/F/No. 200/3/2023-ITA-I dated 24.05.2023 whereby the benefit in terms of section 10(10AA) of the Act has been extended to non-government employees, by raising the limit to Rs. 25 lakhs.

The assessee further submitted that the aforesaid notification was applicable with retrospective effect. He also submitted that the issue was covered in favour of the assessee by numerous orders of ITAT.

The Tribunal observed that it was not in dispute that the subject matter of the appeal was covered in assessee’s favour by numerous orders of ITAT. No precedent was brought to knowledge of the Bench by Revenue side, contrary to the view taken in assessee’s favour by aforesaid orders of ITAT.

In view of the foregoing, the Tribunal allowed the grounds raised by the assessee and the AO was directed to allow the claim of the assessee u/s 10(10AA) of the Act, in accordance with notification of CBDT, which is applicable with retrospective effect.

Download Full Judgment Click Here >>

• ITAT allows exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees
• PCIT has revisionary jurisdiction u/s 263 over the cases passed by the NFAC or the JAO
• Appellate court interfering with MACT finding must undertake reappreciation of evidence
• When delay is not huge & involves huge monetary liability, lenient approach to be taken
• EoGM of company can not ratify diversion of fund raised by preferential issue – SC