Rehired Employee: Should We Recalculate Taxes on Gratuity and Leave Encashment?

Hi Seniors, an employee left the job in Nov-12, and his account was settled. His paid leaves and gratuity were exempted under section 10 of the Income Tax Act. Two months later, in Jan-13 (within the same financial year), he rejoined the same establishment.

The question is whether the gratuity and leave amount that was previously exempted should be added back to his income for tax recalculation, or if it can be ignored.

Since the earlier settlement is full and final and the subsequent one is re-employment, I think the amount received by way of gratuity cannot be treated as income as there is explicit exemption under section 10.