Nizamuddin Gooty Vs ITO (ITAT Hyderabad)
The 14 appeals were filed by employees of Bharat Sanchar Nigam Limited (BSNL) who opted for Voluntary Retirement Scheme-2019 and received compensation/ex-gratia in FY 2019-20 and 2020-21. The assessees had originally claimed exemption of Rs.5,00,000/- under Section 10(10C) of the Income-tax Act, 1961 and offered the balance compensation to tax. Their returns were processed under Section 143(1).
The assessees subsequently sought exemption for the entire compensation under Section 10(10B), relying on later Tribunal decisions. Appeals before the Addl/JCIT involved delays ranging from 1,114 to 1,826 days. In some cases, the delay was condoned, while in others the appeals were dismissed in limine. The fresh exemption claim was also rejected on the ground that it had not been made through revised returns, relying on Goetze (India) Ltd. Vs. CIT.
The Tribunal considered the decision of the ITAT Bengaluru in Basappa Balarama and Murthy Rangappa Vs. ITO, Ward 1, Karnataka, where delays in identical BSNL employee cases had been condoned. It noted that delays ranging from 900 to 2,000 days had been condoned in similar cases and that the Addl/JCIT had also condoned delays in several cases. Following that decision, the Tribunal condoned the delays ranging from 1,114 to 1,826 days in the present appeals.
The Tribunal noted that the assessees’ fresh claims under Section 10(10B) had been rejected without examining their merits. It considered decisions of various Tribunal Benches holding that compensation received by BSNL employees under VRS-2019 was exempt under Section 10(10B).
The Tribunal specifically considered the ITAT Chennai decision in Shri Sekar Gnanaprakasam Vs. DCIT, which held that ex-gratia compensation received under BSNL VRS-2019 was eligible for exemption under Section 10(10B) and directed deletion of additions taxing the compensation.
Following the cited Tribunal decisions, ITAT Hyderabad held that compensation received by the assessees from BSNL under VRS-2019 was exempt under Section 10(10B). The Assessing Officer was directed to verify the claims in light of the Tribunal’s findings, allow the exemption for both assessment years, and determine the tax payable or refundable, if any, according to law.
The appeals were accordingly allowed for statistical purposes. The order was pronounced in the Open Court on 3rd July, 2026.
Cases Discussed
- Shri Sekar Gnanaprakasam Vs. DCIT (ITAT Chennai), ITA Nos.1608 & 1609/CHNY/2026, dated 21.05.2026.
- Basappa Balarama and Murthy Rangappa Vs. ITO, Ward 1, Karnataka (ITAT Bengaluru), ITA Nos.1342 and 1427/BANG/2026 dated 29.05.2026.
- Harish Kumar vs. ITO (ITAT Chandigarh), (2025) 175 taxmann.com 379.
- Goetze (India) Ltd., Vs. CIT (Supreme Court of India), 284 ITR 323 (SC).
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The captioned appeals filed by different assessees are directed against the separate, but identical orders of the respective learned Addl/Joint Commissioner of Income Tax (Appeals) relating to the respective assessment years, tabulated hereinabove in the above cause title. Since common issues are involved in all these 14 appeals, these appeals were heard together and are being disposed off by this single consolidated order for the sake of convenience and brevity.
2. Briefly stated facts of the present appeals filed by different assessees are that they are employed with Bharat Sanchar Nigam Limited (“BSNL”) a Public Sector Undertaking under the administrative control of the Department of Telecommunications, Government of India. In pursuant to the decision of the Union Cabinet for revival of BSNL by reducing employee cost, administrative allotment of spectrum for 4G services, etc., the BSNL has introduced Voluntary Retirement Scheme – 2019, for its employees aged 50 years and above, on payment of retirement ex-gratia. The assessees in the present appeals have opted for Voluntary Retirement Scheme – 2019 and received compensation/ ex-gratia, as quantified by the BSNL and paid in two financial years, i.e., F.Y. 2019-20 and F.Y. 2020-21. The BSNL has paid compensation after deducting applicable TDS as per law. The amount so received by each of the assessees is stated to have been offered to tax for the A.Y. 2020-21 and 2021-22 after claiming exemption of Rs.5,00,000/- u/s 10(10C) of the Income-tax Act, 1961, and paid the due taxes on the balance amount of compensation over and above Rs.5,00,000/-. The returns of income filed by the assessees were processed u/s 143(1) of the Act, accepting the returned income without any tax demand.
3. The assessees in the present bunch of appeals have filed appeals before the learned Addl/JCIT and in some appeals there was a delay ranging from 1,114 days to 1,826 days. The assessees have made a fresh claim of exemption u/s 10(10B) of the Act, towards total compensation received from BSNL under Voluntary Retirement Scheme – 2019. The assessees have also filed petitions for condonation of delay and explained the reasons for delay in filing the appeals before the Ld. Addl/JCIT and stated that due to ignorance of law and the availability of the benefit under section 10(10B) of the Act, and also on account of incorrect professional advice, they have claimed exemption of only Rs.5,00,000/- u/s 10(10C) of the Act, and the balance amount of compensation has been offered to tax. However, upon noticing subsequent developments by way of decisions of various Tribunals on the issue, including the decision of ITAT, Chandigarh Bench in the case of Harish Kumar vs. ITO reported in (2025) 175 taxmann.com 379, they sought fresh professional advice from various professionals, who advised them to file the appeals before the learned Addl/JCIT by explaining the reasons for making a claim of exemption u/s 10(10B) of the Act.
4. The learned Addl/JCIT, after considering the relevant petitions filed by the assessees for condonation of delay, condoned the delay in filing the appeals in a few cases i.e., ITA 903 & 904/Hyd/2026, ITA 911 & 912/Hyd/2026 and ITA 913 & 914/Hyd/2026. However, in some of the cases, the learned Addl/JCIT dismissed the appeals filed by the assessees in ‘limine’ for the delay in filing the appeals on the ground that the reasons given by the assessees in their petitions do not come under “sufficient cause”. Further, the learned Addl/JCIT rejected the fresh claim of exemption u/s 10(10B) of the Act, on the ground that such claim can be made only by way of filing a revised return and, in the absence of a revised return, the fresh claim of exemption claimed by the assessees u/s 10(10B) of the Act, cannot be accepted in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd., Vs. CIT reported in 284 ITR 323 (SC).
5. Aggrieved by the order of the learned Addl/JCIT, the assessees are now in appeals before the Tribunal.
6. The learned counsel for the assessees, Shri M. Achyuth, C.A. and Shri A. Rajesh, C.A., referring to the appeals filed by the assessees and the consequent orders passed by the learned Addl/JCIT, submitted that the learned Addl/JCIT dismissed the appeals filed by a few assessees in ‘limine’ for the delay in filing the appeals. Further, in a few cases, the learned Addl/JCIT condoned the delay after considering the explanation furnished by the assessees. However, the learned Addl/JCIT dismissed the appeals on merits by rejecting the fresh claim of exemption u/s 10(10B) of the Act, because the assessees have made a fresh claim before the learned Addl/JCIT without filing revised returns of income. However, the delay in filing the appeals before the learned Addl/JCIT has been explained by filing petitions for condonation of delay and, as per the assessees, they had filed the appeals belatedly on account of subsequent legal precedents, which are in favour of the assessees on the issue of taxability of compensation received from BSNL under VRS-2019 Scheme and due to incorrect professional advice or ignorance of law, they could not file the appeals within the due date. This fact has been rightly appreciated by various Benches of the Tribunal, including the decision of ITAT, Bangalore in the case of Basappa Balarama and Murthy Rangappa Vs. ITO, Ward 1, Karnataka in ITA Nos.1342 and 1427/BANG/2026 dated 29.05.2026, wherein, in paras 14 and 15, the Tribunal discussed the issue of delay and condoned the delay in filing the appeals involving delays ranging from 900 to 2000 days depending upon the explanation of the assessees and by considering the facts that the learned Addl/JCIT himself has condoned the delay in filing the appeals in a number of cases. Therefore, they submitted that the delay in filing the appeals before the learned Addl/JCIT should be condoned in the interest of justice.
7. The learned counsel for the assessees, on the issue of taxability of compensation received from BSNL under the VRS-2019 Scheme, submitted that the issue is now settled in favour of the assessees by the decisions of various Tribunals, including the decisions of the ITAT, Ahmedabad, Chennai, Bangalore and Pune, where the Tribunals have taken a consistent view and held that compensation received by the employees of BSNL under the VRS-2019 Scheme is akin to retrenchment compensation as contemplated u/s 10(10B) of the Act and, in view of the 2nd proviso to section 10(10B), the entire amount of compensation is exempt u/s 10(10B) of the Act. The Tribunal further held that, wherever the assessees had made a fresh claim of exemption by filing appeals before the first appellate authority, the same had been admitted and directed the A.O. to consider the revised statement of total income filed by the assessees claiming exemption u/s 10(10B) of the Act, and determine the tax payable or refundable, as the case may be. Therefore, he submitted that the fresh claim made by the assessees for exemption u/s 10(10B) of the Act, should be admitted and directions may be given to the A.O. to allow the exemption and grant refund of taxes paid by the assessees, if any, towards compensation as per law.
8. The learned Senior A.R. for the Revenue, Shri Nagender Bhukya, on the other hand, supporting the order of the learned Addl/JCIT, submitted that the delay in filing the appeals before the learned Addl/JCIT is inordinate and ranging from 1114 days to 1826 days and the reasons given by the assessees do not come under ‘sufficient cause’ for condonation of delay, and, therefore, the delay in filing the appeals before the learned Addl/JCIT should not be condoned.
9. The learned Senior A.R. for the Revenue further submitted that compensation received by the present assessees from BSNL under VRS-2019 Scheme, is not retrenchment compensation for claiming exemption u/s 10(10B) of the Act, because, as per the Scheme introduced by BSNL itself, it is very clear that, it is a Voluntary Retirement Scheme and the assessees could either accept or decline the same and there was no compulsion on the assessees to go in for VRS under any circumstances. Therefore, recharacterization of VRS compensation received by the assessees as retrenchment compensation and allowing exemption @ 100% as per section 10(10B) of the Act, is incorrect. The learned Senior A.R. further submitted that, the assessees themselves have filed returns of income for A.Ys. 2019-20 and 2020-21 and claimed exemption of Rs.5,00,000/- u/s 10(10C) of the Act, and offered the balance amount of compensation to tax and paid the applicable taxes thereon. Further, the employer, i.e., BSNL had also deducted TDS on such compensation as applicable under the relevant provisions of the Act. From the above, it is very clear that, the compensation received by the assessees from BSNL is compensation under a Voluntary Retirement Scheme which falls under section 10(10C) of the Act, but not under section 10(10B) of the Act and, therefore, the subsequent claim made by the assessees after a gap of more than five years cannot be accepted. Therefore, he submitted that the appeals filed by the assessees should be dismissed.
10. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We have also carefully considered a plethora of judicial precedents referred to by learned counsel for the assessees on this issue. Insofar as dismissal of the appeals filed by the assessees by the learned Addl/JCIT for the delay in filing the appeals, we find that, the very same issue has been considered by the Coordinate Bench of ITAT, Bengaluru in the case of Basappa Balarama and Murthy Rangappa (supra), and in para 15, the Tribunal has held as under:
“15. However, with respect to condonation of delay, the Id. AR submitted that the Id. CIT(A) should have condoned the delay as in the case of 72 cases before the Coordinate Benches across the country in the case of BSNL employees on identical facts and circumstances, delay has been condoned by the Id. CIT(A) itself ranging from 900 to 2000 days. The assessee has produced the list of 72 cases where the delay is condoned by the Id. CIT(A). Further in case of 144 appeals, the Coordinate Benches have condoned the delay in the case of BSNL employees on identical facts and circumstances. Thus on the parity itself, the appeal of the assessee should have been admitted by the Id. CIT(A). Accordingly, I reverse the order of the Id. CIT(A) in not condoning the delay.”
11. From the findings given by the Coordinate Bench of ITAT, Bengaluru, we find that, in an identical case of BSNL employees, the delay has been condoned by the learned Addl/JCIT himself in a number of cases, even though the delay was ranging between 900 days to 2000 days. The Tribunal further noted that, in more than 144 cases, the Coordinate Benches of the Tribunals have condoned the delay in the case of BSNL employees on identical facts and circumstances. Since the issue of condonation of delay in the case of BSNL employees has already been considered by various Benches of the Tribunal after examining the reasons given by them in the petitions filed for explaining the delay, in our considered view, by respectfully following the decision of the ITAT, Bengaluru Bench in the case of Basappa Balarama and Murthy Rangappa (supra), the delay in filing the present appeals before the learned Addl/JCIT ranging from 1,114 days to 1,826 days deserves to be condoned. Thus, we condone the delay in filing the appeals before the learned Addl/JCIT in all these cases.
12. Having said so, let us come back to the issue on hand. Admittedly, the assessees in the present bunch of appeals are employees of BSNL and opted for the Voluntary Retirement Scheme – 2019 and received compensation in two financial years relevant to the A.Ys. 2020-21 and 2021-22. It is also an admitted fact that the assessees in the present cases had filed their returns of income for A.Y. 2020-21 and offered the compensation received from BSNL to tax after claiming exemption of Rs.5,00,000/- u/s 10(10C) of the Act and the same has been accepted by the A.O. in the order passed u/s 143(1) of the Act. However, the assessees in the present cases have made a fresh claim of exemption towards 100% compensation received from BSNL under Voluntary Retirement Scheme – 2019, u/s 10(10B) of the Act, for the first time before the learned Addl/JCIT and the claims made by the assessees were rejected by the learned Addl/JCIT on technical grounds of not making the claim by filing revised returns in terms of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra). In other words, in all these cases, the claims made by the assessees have been rejected without examining the merits of the claims in light of the provisions of section 10(10B) of the Income-tax Act, 1961.
13. The learned counsel for the assessees has cited a plethora of judicial precedents, including the decisions of various Benches of the Tribunals and we find that, in a number of cases, the Coordinate Benches of the Tribunal across the country have taken a consistent view and held that, compensation received by the employees of BSNL under the Voluntary Retirement Scheme – 2019 is exempt u/s 10(10B) of the Act, and further directed the A.O. to allow exemption in respect of 100% of the compensation received from BSNL u/s 10(10B) of the Act, by accepting the revised statement of total income filed by the assessees and also directed the A.O. to determine the tax payable/refundable as per law.
14. We further note that, the Coordinate Bench of the ITAT, Chennai Bench in the case of Shri Sekar Gnanaprakasam Vs. DCIT in ITA Nos.1608 & 1609/CHNY/2026, dated 21.05.2026, under an identical set of facts, held as under:
“11. We have heard the rival submissions and perused the material available on record, including the written submissions filed by the assessee and the judicial precedents relied upon. The short issue involved in the present appeals is whether the ex-gratia compensation received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption u/s.10(10B) of the Act. From the materials placed before us, it is evident that the BSNL VRS-2019 scheme was formulated pursuant to the revival package approved by the Government of India and the Union Cabinet on 23.10.2019. It is further borne out from the records that the compensation payable under the scheme was funded through Government budgetary support. During the course of hearing, the assessee present submitted that though the nomenclature is mentioned as VRS, it is in effect a retrenchment scheme, since BSNL could not pay salary to employees just before rolling out the scheme. Therefore, the scheme partakes the character of a Government-approved retrenchment compensation scheme and cannot be treated as an ordinary voluntary retirement scheme simpliciter.
12. We further find that identical issue had come up for consideration before the Chandigarh Bench of the Tribunal in the case of Harish Kumar vs. ITO, wherein the Tribunal held that the ex-gratia compensation received under BSNL VRS-2019 is eligible for exemption u/s.10(10B) of the Act. Similar view has also been consistently taken by various appellate authorities across the country in the cases relied upon by the assessee. The Revenue has not brought on record any contrary judicial precedent to take a different view in the matter.
13. Considering the facts and circumstances of the case and respectfully following the judicial precedents cited supra, we hold that the ex-gratia compensation received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption u/s.10(10B) of the Act. Consequently, the additions made by taxing the ex-gratia compensation are directed to be deleted. The AO is also directed to grant consequential relief, in accordance with law, in respect of exemption claimed u/s.10(10AA) of the Act, if otherwise found eligible.”
15. In this view of the matter and considering the facts and circumstances of the case and also by respectfully following the decisions of the Coordinate Benches of the Tribunals referred to hereinabove, we are of the considered view that, compensation received by the assessees in the present cases from BSNL under the Voluntary Retirement Scheme – 2019, is exempt u/s 10(10B) of the Act. Therefore, we direct the A.O. to verify the claim of the assessees in light of our findings given hereinabove and allow exemption claimed by the assessees for both the assessment years u/s 10(10B) of the Act, and determine the tax payable/refundable, if any, to the assessees as per law.
16. In the result, the appeals filed by the assessees are allowed for statistical purposes.
Order pronounced in the Open Court on 3rd July, 2026.
