TMI Blog1990 (11) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping Corporation Ltd. The ITO found that, under the terms and conditions of his employment, the assessee was entitled to 120 days' earned leave for each year of service ; that on the date of his retirement the assessee had to his credit 329 days of earned leave ; and that he was paid a sum of Rs. 87,050 as and by way of cash equivalent to leave salary. Having regard to Explanation (i) to section 10(10AA), which stipulates that the entitlement to earned leave shall not exceed 30 days for every year of actual service, the ITO restricted the exemption under the said section to the cash equivalent of 82 days' earned leave and in the process allowed exemption of Rs. 15,134. In working out the said figure, the ITO took into account only 25% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein. The new clause was amended by the Taxation Laws (Amendment) Act, 1984, again with retrospective effect from 1-4-1978, making it clear that the exemption will be available only in respect of payments received at the time of retirement, whether it be on superannuation or otherwise. 6. Now, the new clause is applicable both to government employees and nongovernment employees. As respects the former category of employees, section 10(10AA)(i) speaks of " the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise ". It is significant to note that the legislature did not consider it necessary to spell out the manner in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme was amended, consequential amendments were made to section 10(10AA) also. And the rider contained in Explanation (i) to section 10(10AA) will have to be understood in this context. 8. As we see it, the true effect of Explanation (i) is to substitute the leave entitlement of 30 days for leave entitlement of more than 30 days provided for by and under the schemes applicable to non-govemment employees. There is nothing in the said Explanation to suggest even remotely that the benefit of section 10(10AA) is to be limited to only those non-govemment employees in whose cases the leave encashment scheme itself stipulates that the entitlement to earned leave shall not exceed 30 days. Had this been the intention of the legislature, Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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