December 2022
Exemption u/s 10(10AA) — Encashed earned leave by employees — Scope of section 10(10AA) — Complete exemption for employees of Central Government or State Government — Meaning of Government employee — Tamil Nadu Agricultural University — Completely funded by State Government and under its complete control — Retired employees of Tamil Nadu Agricultural University — Entitled to complete exemption in respect of encashed earned leave.
By K. B. Bhujle, Advocate
59. Dr. P. Balasubramanian and Ors. vs. CCIT(TDS)
[2022] 448 ITR 318 (Mad.)
Date of order: 10th August, 2022
Ss.10(10AA) of ITA,1961
Exemption u/s 10(10AA) — Encashed earned leave by employees — Scope of section 10(10AA) — Complete exemption for employees of Central Government or State Government — Meaning of Government employee — Tamil Nadu Agricultural University — Completely funded by State Government and under its complete control — Retired employees of Tamil Nadu Agricultural University — Entitled to complete exemption in respect of encashed earned leave.The petitioners are employees of the Tamil Nadu Agricultural University. The employees had retired from service in 2017, and at the time of retirement, had been granted a surrender of leave salary. An objection was raised by the local fund audit on the grounds that tax ought to have been deducted under the provisions of the Income-tax Act, 1961. Thus, the University sought clarification from the local fund audit as well as from the Income-tax Department.
The petitioners challenged the audit objections issued by the local fund audit calling upon the petitioners to remit the Income-tax on surrender of leave salary on the grounds that tax has not been deducted at source in terms of the Income-tax Act, 1961.
The Madras High Court allowed the writ petitions and held as under:
“i) Section 10(10AA) of the Income-tax Act, 1961, deals with
