INCOME TAX ACT, 1961

Section 10(10AA)(i)

Exemption under section 10(10AA)(i) - Leave encashment - Assessee being retiree of PSU seeking treatment as Government employee -

Assessee, retiree of PSU by way of writ petition sought direction for treatment as government employees so as to attract section 10(10AA)(i) entitling him to full tax exemption on leave encashment after retirement/superannuation.Held: Employees of Central Government and State Government form a distinct class and classification is reasonable having nexus with object sought to be achieved. The Central Government and State Government employees enjoy a 'status' and they are governed by different terms and conditions of the employment. Merely because Public Sector Undertaking and Nationalised Banks are considered as 'State' under article 12 of Constitution of India for the purpose of entertainment of proceedings under article 226 of Constitution and for enforcement of fundamental right under the Constitution, it does not follow employees of such Public Sector Undertaking, Nationalised Banks or other institutions which are classified as 'State' assume the status of Central Government and State Government employees. Therefore, retiree of PSU could not be treated as Government employee for the purpose of section 10(10AA)(i).

REFERRED : Ref. Officers & Supervisors of IDPL v. Chairman & M.D. IDPL AIR 2003 SC 2870.

FAVOUR : Against the assessee.

A.Y. :

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