S. P. KAUPR, J. M.: revenue has come up with following specific ground: "On facts and in circumstances of case as well as in law AAC erred in directing ITO to allow exemption under s. 10(10AA) of IT Act on leave encashment though receipt was not on account of retirement." assessee having received Rs. 13,553 as leave encashment salary, claimed to be exempt under s. 10(10AA) of IT Act, 1961, but claim stood negatived at assessment stage with reasoning that leave encashment is exempt from tax if it is received at time of retirement/super-annuation. ITO also observed that assessee has not filed nay evidence in support of above situation viz. retirement/ super-annuation. assessee however succeeded at first appellate stage, since ld. AAC deserved that from salary certificate, it is clear that assessee has left service of Hotel oberoi from 1st Oct., 1979 where he was working from year 1965 and period of leave encashment is only 58 and half days and accordingly ITO was not justified in taxing amount. Before him stand of assessee has been that he has retired from service since he had left job on 30th Sep., 1979 and joined ILO assignment as its expert on Touriosm Development in Bali Indonesia. Reliance was placed by assessee on order of ITAT, Madras and Bangalore Benches where it is claimed that ITAT held that even in case where assessee received leave encashment while in service, it was exempt from tax being capital receipt (details about reliance of orders of ITAT is lacking in order of ld. AAC). revenue being aggrieved is in appeal and we have heard parties at length. Sec. 10(10AA) of IT Act provided that in computing total income of previous year of any person, any payment received by employee as case equivalent of leave salary in respect of period of earned-leave at his credit at time of his retirement whether on super-annuation or otherwise as does not exceeded six months calculated on basis of average salary drawn by employee during period of 10 months immediately proceeding his retirement whether on super-annuation or otherwise or 30,000 rupees, which ever is less shall not be included in computation. On facts of present assessee s case assessee retired form service, qua his then employers Cheroi Hotel, since he left India on ILO assignment and period involving leave encashment being 58 and half days, s. 10(10AA) of IT Act comes into play and exemption is warranted on facts and in law. ground as also appeal by Revenue fails, but before parting, we like to say that reliance of Revenue on decision of Hon ble Karnataka High Court in Patil Vijay Kumar & Ors. vs. Union of India & Anr. (1985) 48 CTR (Ker) 41: (1985) 151 ITR 48 (Ker) is of no help to Revenue, since facts there were distinguishable because there employees continued to be in service and have not retired. *** INCOME TAX OFFICER v. VIRENDER KUMAR OBEROI