Facts of the Case

The assessee, Sonia Pravin Rajani, filed an appeal for Assessment Year 2019-20 against the order dated 31.07.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi under Section 250 of the Income-tax Act, 1961. The assessment was framed under Section 147 read with Section 144B.

During assessment proceedings, the Assessing Officer made additions of ₹68,924 in respect of leave encashment and ₹1,51,216 in respect of death-cum-retirement gratuity, treating both as taxable income. On appeal, the CIT(A) allowed exemption in respect of leave encashment but confirmed the addition relating to gratuity on the ground that the assessee failed to establish eligibility for exemption under Section 10(10). Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether death-cum-retirement gratuity received by the assessee was exempt under Section 10(10) of the Income-tax Act, whether the CIT(A) erred in confirming the addition despite documentary evidence in the form of Form 16, and whether the addition could be sustained in law.

Petitioner’s Arguments

The assessee submitted that the gratuity amount of ₹1,51,216 was received as death-cum-retirement gratuity from the employer and was fully exempt under Section 10(10) of the Act. It was contended that Form 16 issued by the employer was submitted, clearly evidencing the nature of the receipt. The assessee argued that the CIT(A) erred in confirming the addition despite clear statutory exemption.

Respondent’s Arguments

The Revenue relied on the order of the CIT(A) and contended that the assessee had not sufficiently proved eligibility for exemption under Section 10(10).

Court Order / Findings

The ITAT Ahmedabad examined the provisions of Section 10(10) of the Income-tax Act and observed that death-cum-retirement gratuity received by an employee is specifically exempt from tax. The Tribunal noted that the assessee had furnished Form 16 issued by the employer evidencing receipt of gratuity.

In view of the clear statutory provisions and documentary evidence on record, the Tribunal held that the gratuity amount of ₹1,51,216 was exempt from tax under Section 10(10). Accordingly, the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted.

Important Clarification

The Tribunal clarified that death-cum-retirement gratuity squarely falls within the exemption provided under Section 10(10) of the Income-tax Act. Where the nature of receipt is evidenced by employer-issued documents such as Form 16, denial of exemption is not sustainable.

Final Outcome

The appeal filed by the assessee was allowed. The addition of ₹1,51,216 made on account of death-cum-retirement gratuity was deleted in full.
Link to Download Order  https://www.mytaxexpert.co.in/uploads/1769063186_SONIAPRAVINRAJANIAHMEDABADVS.NFACDELHIPRESENTJURIS.THEITOWARD532AHMEDABAD.pdf

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