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TMI Blog1987 (6) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the time of filing a revised return, the assessee excluded an amount of Rs. 58,311 being leave encashment allowance. This amount includes leave salary of Rs. 56,000 and salary for two days of Rs. 2,311. The ITO did not allow the contention of the assessee that the entire encashment of leave salary is exempt under s. 10(10AA) of the IT Act. On appeal, the AAC allowed the claim of the assessee holding that a specific provision is made under s. 10(10AA) by Finance Act, 1982 w.e.f. 1st April, 1978. According to this, encashment of leave salary should not be included in the total income of the assessee. The AAC further held that s. 10(10AA) clearly speaks of all cases of encashment of leave salary irrespective of the fact whether they retir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirement, voluntary retirement, resignation, force retirement, termination of service by employer, striking off the name from the rolls etc. In all such cases, the benefit of tax exemption of leave encashment to an employee on retirement otherwise than on superannuation will be available. 6. We have considered the rival submissions. In order to appreciate the legal position, we will mention here the meaning off the words "retire", "retirement" and "resignation" given in different dictionaries. I. Chambers Twentieth Century Dictionary (1972 Ed.) retire (vi) : to withdraw, to retreat, to recede, to withdraw from society, office, public or active life, business, profession, etc. retirement : Act of retiring, state of being or having reti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee's claim for exclusion of the amount of encashment of leave from the total income was considered in the case of N.b. Tendolkar vs. ITO by the Tribunal reported in (1980) 19 CTR (Trib) 27 (Mad) where on the event of resignation also the provisions of s. 10(10AA) was made applicable. Even otherwise the word "otherwise" as appearing in s 10(10AA) covers the retirement of an employee. In all other cases, except superannuation, this would cover the cases of leave encashment, payment on death, retrenchment, premature retirement, voluntary retirement, resignation, force retirement etc. The word 'otherwise' is very significant which covers all sorts of cases in which a person either voluntarily withdrew from the office or he is retired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word 'otherwise' used in the Act covers all sorts of cases of retirement whether by resignation or by premature retirement, voluntary retirement or termination of service by employer. Therefore, we hold that the AAC was right in allowing exemption to the assessee. We find no merit in the departmental appeal. 7. Now we take up the Cross Objection. The grievance of the assessee in this cross objection is that the AAC erred in not accepting the contention of the assessee that the amount of Rs. 58,311 received in lieu of encashment of leave salary is a capital receipt and as such is not taxable at all. Since at the time of hearing, the ld. counsel for the assessee has not pressed this cross objection, we need not discuss the same. 8. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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