Shraddha Pralhad Arote Vs ITO (ITAT Pune)
In the case of Shraddha Pralhad Arote vs ITO decided by the Income Tax Appellate Tribunal, Pune Bench, the appeals related to Assessment Years 2020–21 and 2021–22 were filed against orders passed under Section 143(1)(a) by the authorities. Since common issues were involved, the Tribunal adjudicated them through a consolidated order.
The central issue was whether ex-gratia compensation received by employees of Bharat Sanchar Nigam Limited (BSNL) under the Voluntary Retirement Scheme (VRS), 2019, implemented as part of a government-approved revival plan, qualifies as retrenchment compensation and hence is exempt from tax under Section 10(10B) of the Income-tax Act, or whether it should be treated under Section 10(10C), which limits exemption to Rs. 5 lakh.
The assessees, who were BSNL employees, had originally offered the compensation to tax after claiming exemption up to Rs. 5 lakh under Section 10(10C). Subsequently, they raised a new claim before the appellate authority asserting that the entire compensation was exempt under Section 10(10B), as it constituted retrenchment compensation and a capital receipt. In some cases, the Commissioner (Appeals) dismissed the claims either due to delay in filing (in some instances exceeding 1,396 days) or on the ground that such claims were not made in the original or revised return.
