JUDGEMENT
F.C.Rustagi, -
(1.)THIS is an appeal preferred by the assessee under the I.T. Act. The two grounds raised are (1) regarding benefit under Section 10(10-A A) and (2) regarding deduction under Section 80C in respect of investments made in National Savings Certificates.
(2.)Briefly to state the facts, the assessee, Shri S.P. Banerjee, was an employee of the Reserve Bank of India and subsequently he joined in the National Bank of Agricultural and Rural Development, hereinafter known as NABARD. He retired on 31-10-1984. Butas he accumulated earned leave to his credit, he went on to get salary from 1-11-1984 to 30-4-1985. There is no controversy about the fact that within five days of his retirement, he got the provident fund. The assessing officer and the Dy. C.I.T.(A) denied him the benefit under Section 10(10-AA). Their contention was that it was not on the retirement or superannuation when the assessee got the benefit of leave encashment. Hence, according to them, it could not be exempt under Section 10(10-AA).
The learned authorised representative for the assessee submitted that the assessee had actually retired on 31-10-1984 and he got the provident fund within 5 days then. He drew my attention to the certificate placed on page 10 of the paper book. He submitted that benefit of Section 10(10-A A) should not have been denied by the two lower authorities. In the alternative he submitted that in case he does not succeed in the first contention, i.e. regarding exemption of leave encashment under Section 10(10-AA), then benefit of Section 80C should be allowed to the assessee in respect of provident fund for six months, i.e. 1-11-1984 to 30-4-1985. The learned Departmental Representative in respect of this dispute relied on the orders of the two lower authorities. He submitted that the assessee went on to receive the salary for six months after his retirement and, therefore, the benefit contemplated under Section 10(10-AA) will not be available to the assessee.
(3.)AFTER taking into consideration the rival submissions and looking to the facts available on record, I am unable to confirm the finding of the Dy. C.I.T. (A). There is no controversy about the fact that on attainment of superannuation, i.e. when the assessee completed the age of 58 years, he retired on 31-10-1984 and to that effect there is a certificate given by the assessee's employer in the following words:
11 September 1987.
This is to certify that Shri S.P. Banerjee, Ex-General Manager, retired from the Bank's services on 31 October, 1984 after attaining age of 58 years. He had accumulated leave for six months but not availed of as on the date of his retirement. In terms of Rule 19(4) of NABARD (Staff) Rules, 1982 leave salary for six months (i.e. 1 November 1984 to 30 April 1985) was paid to Shri Banerjee in monthly instalments, at his option, after attaining the age of retirement and he was not on duty after 31 October 1984.
This certificate is issued to Shri Banerjee for submission to the Income-tax Office.
Undoubtedly he went on to get the salary for six months, i.e. from 1-11-1984 to 30-4-1985, but not for a day he worked in the office during this period nor he could be treated as the employee of the bank during this period. To that effect another certificate is also placed as Annexure in the compilation, which was in conformity with the rules of NABARD. The said certificate reads as under:
15 March 1986.
This is to certify that in terms of Rule 19(1) of NABARD (Staff) Rules 1982, an employee in Group A shall retire at 58 years of age. Further, under Rule 19(4) of the said Rules, where an employee has ordinary leave earned but not availed of as on the date of retirement (i.e. date of attaining the age of 58 years), he is permitted at his option, to avail of such leave subject to a maximum of six months after attaining the age of retirement. Accordingly, Shri S.P. Banerjee, ex-General Manager, was permitted to avail of six months leave after attaining the age of 58 years on 31 October 1984 and leave salary was paid to him for six months from 1 November 1984 to 30 April 1985. Income-tax on the amount of leave salary paid up to 31 March 1985 was deducted at source during 1984-85 at the rate applicable in Shri Banerjee's case.
This certificate is issued to Shri Banerjee for submission to the Income-tax Office.
When I go through the two certificates on one hand and looking into Section 10(10-AA) on the other hand, I find that the assessee's claim ought to have been allowed and the Dy. C.I.T.(A) was in error in rejecting the same.
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