Tax treatment of notice pay deducted from salary

Hello,

I wanted to know tax treatment of notice pay deducted from salary of employee?

Suppose the notice period is 3 months and the employee has given resignation on 1st December.He is serving it for 1 month and paying off for 2 months out of his accumulated leaves balance amount and exgratia amount.even he is not receiving salary for last month served(Dec).Now my question is: Can it be said that there is no intention to pay & recieve salary for those three months i.e. for which he hasn/t recd salary as well as his leave encashment and exgratia has been retained by the company.

or Should he be taxed for salary upto dec without any deduction of notice pay ?

Please quote the case law if any.