ATTENTION CIRCLE SECRETARIES & CHQ OFFICE BEARERS.

As you are aware, many BSNL retirees are getting notice under section 154 of the Income Tax Act, 1961, from CPC Bangalore and Ghaziabad.CHQ has already taken up the issue with BSNL, Income Tax Department and Finance Minister. Meanwhile retirees have to give reply to the notice. CHQ has prepared a draft for this purpose which is reproduced below. Circle/ District Secretaries are requested to guide the retirees to fill up it properly for onward transmission to the respective CPC.

K G Jayaraj

General Secretary

From ………………………………….. ….. ……………………………………….. To ………………………………………… …………………………………………

Sir,

Sub: Notice U/S 154 of IT Act 1961 for rectification of IT return for AY 2019-2020

Ref:Your letterNo……………………………………………………………………

With reference to your above letter . I am submitting the objection as follows The difference mentioned in the column “ Less Allowances to the extend exempt U/S 10 Sl No 1 Reporting Head Sec 10(10AA)-Earned leave encashment on retirement” is Rs ………………(Difference between the amount as provided by Tax payer in return of income(………………..) and the amount as computed under section 154(3 00 000) The said amount Rs ………………………. Is for my earned leave at credit on the date of absorption in BSNL ie as on 1-10-2000 for …………..days. The leave earned during Government Service ie DOT and the encashment of Rs ……………is exclusively for the leave earned in Government Service, it is exempted from income Tax as per clause 1 of section 10(AA) of IT act 1961

It is pertinent to point out that ,BSNL and MTNL employees absorbed from DoT are the only CPSE employees getting Pension from the consolidated fund of the government. Further, DoT employees during their absorption in BSNL were permitted to carry forward their earned leave and half pay leave to the new entity.

BSNL has clarified the same as “ The full amount received by a retiring absorbed employee as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of the retirement, under sub clause (1) of section 10(10AA),Income Tax Act 1961,calculated as per the accepted norm adopted for calculating amount due for the Government service period ,will be eligible for full exemption , on the date of absorption in BSNL from DOT” .

In a Judgement by the income Tax Appellate Tribunal, Mumbai vide ITA No 3261/Mum/2018 it was held that “as per provision for section 10(10AA)(1) of the Act, the assessee in entitled for exemption on the amount of leave encashment of the leave earned during the period before absorption as per section 10(10AA)(1) of the Act as applicable to Central Gorverment before that date he was employee of Government of India ie the Central Government “.

In view of the above and also as per the provision in sub clause (1) of section 10 (10AA0 of IT Act 1961, the full exemption claim is in order and hence IT return needs no revision /rectification. I request you to accept the explanation and restore the order already issued under section 143(1).

Thanking you,

Yours sincerely,

( Name)

Encl: 1) Copy of Assessment order 2) Copy of LPC 3) BSNL Clarification