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Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2010 Respected Sir,

Assessment of my father who was a GOVT. EMPLOYEE resigned from his job in Aug 2007 as a consequence of these leave salary standing credit of the employee is not payable as per rules of the company. It had been claimed as Liquidated Damage and the same has been disallowed by dept.

The amount of leave salary is Rs.525967 and the demand notice issued under Sec.156 after making ass. under Sec 143 (3) for AY 2008-09 is of Rs.218471.

Sir can we claim the above loss of leave salary of Rs.525967 so that the tax liability may be saved..

Returned Income 697100
Add:- Dis allowance
on account of liquidated
damages. 525967

Income assessed 1223067
Tax on assessed income 315920
Surcharge 31592
EC 10425
Tax & Int.234 D 15607
Int.244 A 7801

Total tax and Int. 381345
less Taxes paid 162874
Net Payable 218471

Thanking You.

sanjay

sanjay (Expert)

31 December 2010 lEAVE SALARY FOR GOVERNMENT EMPLOYEES AT THE TIME OF RETIREMENT IS 100 % EXEMPT U/S {10(10AA)(i)}

even it will not form part of taxable income so no need of showing like liquidated damages etc.

there is no tax liability

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

01 January 2011 If leave salary is not payable to the employee as per Govt Company's Rules then how the amount of 525967/- i.e. Liquidated damage, has been received/arrived.

It's not clear from the query. Please elaborate Returned Income and the ground on which addition is being made more particularly.

However, salary is taxable on due basis and in my opinion if any amount which has not become due can not be added to Salary. From your question it seems that addition is being made even though the leave salary amount has not been received.

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