"1 INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH : SMC BEFORE HON’BLE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND HON’BLE SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No. 1844/MUM/2026 िनधा\u0005रणवष\u0005/Assmt. Year: 2021-22) Permanent Account Number: ABPPC8364D Harshad Vasudeo Chaudhari B/104, Laxmi Baug Complex, Varad Vinayak Lane Bazar Ward, Virar East, Thane 401305 Vs. Circle 3, Thane Qureshi Mansion, Gokhale Road, Thane 400602 (अपीलाथ\u000f/ Appellant) (\u0010\u0011थ\u000f /Respondent) िनधा\u0005\u0006रती ारा/Assessee represented by: Shri. Himanshu Gandhi राज व ारा/Revenue represented by: Shri. Kiran K. Chhatrapati – Sr. DR (Virtually Appeared) सुनवाईकीतारीख/Date of conclusion of hearing: 19.06.2026 घोषणाकीतारीख/Date of pronouncement: 29.06.2026 आदेश / ORDER PER:NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Assessee against the order dated 24.12.2025, impugned herein, passed by the National Faceless Appeal Centre (NFAC), New Delhi/Ld. Commissioner of Income Tax(Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y.2021-22. Printed from counselvise.com 2 2. In the instant case, the Assessee was employed with Hindustan Petroleum Corporation Limited, a Government of India Enterprise/Public Sector Undertaking, and retired from service on 30.09.2013. 3. During the year under consideration, the Assessee filed his return of income in Form ITR-1 (Sahaj) on 19.07.2025, declaring a total income of Rs.16,17,190/- after claiming exemption under Section 10(10AA) of the Act amounting to Rs.13,63,160/-. 4. However, the CPC, vide intimation under Section 143(1) of the Act dated 31.12.2021, and thereafter vide orders dated 20.05.2024 and 25.07.2025, declined to grant the entire exemption of Rs.13,63,160/- claimed by the Assessee and restricted the exemption under Section 10(10AA) of the Act to Rs.3,00,000/- only. 5. The Assessee, being aggrieved, preferred an appeal before the Ld. Commissioner, who, after taking cognizance of Notification No.31/2023 dated 24.05.2023 enhancing the exemption limit for leave encashment on retirement in the case of non-government employees from Rs.3 Lakhs to Rs.25 Lakhs with effect from 01.04.2023, upheld the action of the CPC in restricting the exemption to Rs.3 Lakhs only by holding as under: “MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 24th May, 2023 (INCOME-TAX) S.O. 2276(E). In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of Section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether on superannuation or otherwise, hereby specifies the amount of Rs.25,00,000 (Rupees Twenty-five Lakhs Printed from counselvise.com 3 only) as the limit in relation to employees mentioned in the said sub-clause who retire, whether on superannuation or otherwise. 2. This notification shall be deemed to have come into force with effect from the 1st day of April, 2023. [Notification No.31/2023/F. No.200/3/2023-ITA-1] SOURABH JAIN Under Secretary Explanatory Memorandum: It is hereby certified that no person is being adversely affected by giving retrospective effect to this notification. 5.6 On perusal of CBDT Notification No.31/2023 dated 24.05.2023, it is evident that the exemption limit for leave encashment on retirement in the case of non-government employees was enhanced from Rs.3 Lakhs to Rs.25 Lakhs. The enhanced limit is applicable to employees who retired, whether on superannuation or otherwise, on or after 01.04.2023. 5.7 Since the aforesaid notification came into force with effect from 01.04.2023, the same is not applicable to the appellant's case. Accordingly, it is held that the CPC has rightly restricted the exemption under Section 10(10AA) of the Act to Rs.3,00,000/-. Therefore, the grounds raised by the appellant are dismissed. 6.0In the result, the appeal is dismissed.” 6. Thus, the Assessee being aggrieved has preferred the instant appeal before us. There is no dispute that the CBDT, vide Notification No.31/2023 dated 24.05.2023, enhanced the exemption limit under Section 10(10AA) of the Act in respect of leave encashment received by non-government employees from Rs.3 Lakhs to Rs.25 Lakhs with effect from 01.04.2023, as reproduced hereinabove. 7. However, prior to that notification, the Hon'ble High Court of Delhi in Kamal Kumar Kalia & Ors. Vs. Union of India & Ors., W.P.(C) No.11846/2019, vide order dated 08.11.2019, while dealing with the issue and situation “that though salaries of employees of Govt. and non- Printed from counselvise.com 4 Govt. employees have been upwardly revised and there is rise in inflation”, taken cognizance and issued notice to the Union of India and ors. by observing and holding as under: 8. We are however of the, prima facie, view that the grievances of the petitioner with regard to exemption limit under Clause (ii) of Section 10 (10AA) not being raised since 1998, appears to be justified. This is so because over the decades, the pay-scales admissible to government servants, and even employees of the Public Sector Undertaking and Nationalised Banks and all others have been upwardly revised, keeping in view, the financial growth in the country as well as on account of rising inflation. The last drawn salaries have increased manifold since time and notification issued under Clause (ii) of Section 10 (10AA) was lastly issued, as taken note of hereinabove, on 31.05.2002. We therefore, issue notice to the respondents limited to this aspect. 9. Issue notice. Learned counsel for the respondents accepts notice. Respondents should file counter affidavits be filed within six weeks. Rejoinder thereto, if any, be filed before the next date. 10. List on 04.05.2020. 8.We further observe that the Hon'ble Coordinate Bench of the Tribunal at Mumbai in Balakram Hiranand Lohana, Mumbai vs. ADIT, CPC, Bangalore (ITA No.3791/Mum/2025), decided on 31.10.2025, considered an identical issue and, by following the decision of the Hon'ble Coordinate Bench in Govardhan Deepachand Bhambhani Vs. ITO [2025] 177 taxmann.com 220 (Ahmedabad-Trib.), and applying the doctrine of stare decisis, allowed the identical claim of the Assessee, who had retired from Bank of Baroda on 31.05.2019i.e. prior to the above CBDT Notification. 9. We further observe that the Hon'ble Coordinate Bench of the Tribunal at Chennai, in Balasubramanian Venkatachalaperumal Vs. Deputy Commissioner of Income-tax [2026] 186 taxmann.com 411 (Chennai-Trib.) / ITA No.96 (CHNY) of 2026, decided on 04.05.2026, also dealt with an identical issue, wherein the Assessee had retired during the Financial Year 2019-20. The Hon'ble Bench, after considering the CBDT Notification dated 24.05.2023 (supra), the decision in Kamal Kumar Kalia & Ors. (supra), ultimately allowed the Assessee's claim by Printed from counselvise.com 5 applying the enhanced exemption limit of Rs.25 Lakhs, under Section 10(10AA) of the Act. 10. We further observe from the aforesaid order that the Hon'ble Coordinate Bench also taken into consideration various decisions, on the identical issue, as reproduced in paragraph 23 thereof. For the sake of brevity, the same is reproduced herein below, wherein various Benches of the Tribunal allowed the exemption claimed by the respective Assessees, even in relation to the assessment years prior to the issuance of the aforesaid notification enhancing the exemption limit to Rs.25 Lakhs. “23. I have noted above the contention of the Ld. Counsel for the assessee before me of various Co- Ordinate Bench decisions of the ITAT, in as much as 22 cases, holding that the limit of exemption of leave encashment as per Section 10(10AA) of the Act applicable for the impugned year would be Rs.25 lacs. The Ld. Counsel for the assessee submitted the list of the said decisions vide submission dated 25-11- 2025 as under: - Sr No. Name of the Appellant and ITA No. Name of the Employer Asst. Year ITAT Bench Date of order 1. Mr.Ram Charan Gupta ITA No.408/JPR/2022 Bank employee 2020-21 Jaipur 27.06.2023 2. Mr. Satish Kumar Thakur ITA No.211/CHD/2023 Electricity Board Himachal Pradesh 2018-19 Chandigarh 12.09.2023 3. Mr. Mangala Ram Nimbark ITANo.542/JPR/2023 BSNL 2018-19 Jaipur 04.10.2023 4. Mr.Govind Chatwani ITA No.385/JPR/2023 Electricity Board Rajasthan 2020-21 Jaipur 31.10.2023 5. Mr.Devendra Kumar Gupta MA No.49/JPR/2023 (Arising out of ITA NO.17/JPR/2023) Ajmer Vidyut VitaranNigam Ltd. Rajasthan 2020-21 Jaipur 18.02.2025 6. Mr. Dashrath Kumar Sen ITA No.l258/JPR/2024 BSNL 2020-21 Jaipur 05.03.2025 7. Mr. Devi Dutt Agrawal ITA NO.1375/JPR/2024 State Bank of India 2020-21 Jaipur 13.03.2025 8. Mr. Suman Kumar Jha ITA N0.1179/AHD/2024 Oil and Natural Gas commission Ltd. 2020-21 Ahmedabad 18.03.2025 9. Mr. Dinesh Kumar Mittal ITA No.1570/ JPR/2024 Medical Department Rajasthan 2021-22 Jaipur 07.04.2025 Printed from counselvise.com 6 10. Mr. Sham Sunder Sahani ITA No.129/ DEL/2025 Canara Bank 2021-22 Delhi 21.04.2025 11. Mrs. Neelam Gupta TTA No.081/Del/25 Bank of Baroda 2020-21 Delhi 21.04.2025 12. Mr. Sharad Shukla ITA No. 108/AGR/24 2020-21 Agra 22.04.2025 13. Mr. Vijay Kumar Jain ITA No. 175/AGR/22 State Bank of India 2019-20 Agra 18.06.2025 14. Mr.Anil Kumar Khatri ITA No. 187/AGR/22 State Bank of India 2020-21 Agra 18.06.2025 15. Mr. Goverdhan Bhambhani ITA No.289/AHD/25 Punjab National Bank 2020-21 Ahmedabad 28.07.2025 16. Mrs. Sujata Guta ITA NO. 915/JPR/25 State Bank of Bikaner & Jaipur 2022-23 Jaipur 31.07.2025 17. Mr. Om Prakash Khandelwal ITA No.887/JPR/25 Life Insurance Corporation of India 2022-23 Jaipur 06.08.2025 18. Mr. Ashok Arora ITA No.2942/DEL/25 Punjab & Sind Bank 2021-22 Delhi 28.08.2025 19. Mr. Chandra Prakash Vashishtha ITANo.ll39/JPR/25 State Bank of India 2021-22 Jaipur 07.10.2025 20. Mr. Rajiv Kumar Wadhwa ITA No.5897/DEL/25 Canara Bank 2020-21 Delhi 29.10.2025 21 Mr. Vijay Pal Gupta ITA No.5915/DEL/25 Canara Bank 2021-22 Delhi 29.10.2025 22. Mr. Sudhakar G.Paldewar ITA No.l781/pUN/25 State Bank of India 2020-21 Pune 31.10.2025”. 11.Admittedly, the exemption limit under Section 10(10AA)(ii) of the Act had not been enhanced since 1998. Accordingly, the Hon'ble Delhi High Court in Kamal Kumar Kalia & Ors. (supra) found substance in the grievance raised by the petitioners and issued notice to the Union of India and others in W.P.(C) No.11846/2019 vide order dated 08.11.2019. It appears that, may be, the CBDT taking cognizance of the said observations, subsequently enhanced the exemption limit from Rs.3 Lakhs to Rs.25 Lakhs vide Notification No.31/2023 (supra). Therefore, the substantial delay in enhancing the exemption limit deserves to be interpreted liberally in favour of the Assessee. Consequently, various Printed from counselvise.com 7 Courts and Coordinate Benches of the Tribunal have extended the benefit of the enhanced exemption limit, even to cases pertaining to the period, prior to the issuance of the said notification. 12.Thus, in view of the aforesaid discussion and analysis, we have no hesitation in allowing the exemption claimed by the Assessee up to the limit of Rs.25 Lakhs, or to the extent actually claimed, subject to the maximum limit of Rs.25 Lakhs. However, the claim shall be subject to verification by the Jurisdictional Assessing Officer, within one month from the date of receipt of this order. 13.Thus, in the result, the appeal filed by the Assessee is allowed in the above terms. Order pronounced in the open court on 29.06.2026. Sd/- ARUN KHODPIA ACCOUNTANT MEMBER Sd/- NARENDER KUMAR CHOUDHRYJUDICIAL MEMBER (Aditi Pandare) Private Secretary Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai Printed from counselvise.com "