Harish Kumar Vs ITO (ITAT Chandigarh)
Section 10(10B) Exemption Allowed on BSNL VRS Second Instalment as Retrenchment Compensation: ITAT Chandigarh
The assessee appealed against the order dated 20.12.2024 passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi, for AY 2021-22, challenging the restriction of exemption under Section 10(10B) of the Income-tax Act, 1961 to ₹5,00,000 instead of ₹30,17,000 received under the BSNL Retirement Scheme, 2019. The assessee, originally an employee of the Department of Telecommunication Services and Department of Telecom Operations, became an employee of Bharat Sanchar Nigam Limited (BSNL) after its formation with effect from 01.10.2000. The assessee opted for the BSNL Retirement Scheme, 2019 and received total emoluments of ₹30,17,000. The Assessing Officer disallowed ₹25,17,000, holding that the scheme was voluntary and not compulsory, and therefore restricted exemption to ₹5,00,000 under the second proviso to Section 10(10B). The CIT(A) upheld the disallowance.
Before the Tribunal, the assessee submitted that although the scheme was described as a Voluntary Retirement Scheme (VRS), it was in substance a retrenchment scheme introduced as part of the Government’s revival package for BSNL and MTNL to reduce employee costs. It was argued that BSNL had suffered losses for three consecutive years, employees had not received salaries for several months, and the scheme targeted employees above 50 years of age. The assessee also pointed out that compensation under the scheme was payable in two instalments and that the first instalment had already been held exempt under Section 10(10B) by the CIT(A) for AY 2020-21. The CIT(A), in that order, had relied upon the Government’s revival scheme, the decision of the Madras High Court in M/s Hindustan Photo Film Workers Welfare Centre, and the Chandigarh Bench decision dated 20.09.2023 involving employees of HTML-TD, observing that the issue had attained finality after dismissal of the SLP by the Supreme Court.
