Preeti Dubey Vs ITO (ITAT Agra)
BSNL VRS Relief Beyond ₹5 Lakh: ITAT Allows Full Exemption Despite Omission in the Return
Retirement Compensation Originally Offered to Tax
The assessee, a former employee of Bharat Sanchar Nigam Limited, received ex-gratia compensation under the BSNL Voluntary Retirement Scheme, 2019.
According to her statement of facts, the compensation was inadvertently offered to tax after claiming the limited exemption of ₹5 lakh under section 10(10C). The treatment adopted in the return arose from a lack of clarity regarding the applicable exemption.
The return was processed by the CPC, accepting the income as declared. Subsequently, the assessee became aware of the Chandigarh Tribunal’s decision in Harish Kumar v. ITO, ITA No. 42/CHD/2025, dated 30 May 2025, holding compensation under the same scheme exempt under section 10(10B).
She therefore pursued an appellate claim for full exemption. The amounts in dispute before the Agra Tribunal were ₹9,93,938 for AY 2020-21 and ₹21,81,583 for AY 2021-22.
First Appellate Authority Rejects the Fresh Claim
The first appellate authority rejected the assessee’s claim, principally emphasising that exemption under section 10(10B) had not been claimed in the original return or through a revised return.
It treated the request as a fresh claim that could not be entertained in the appellate proceedings.
Reliance was placed on Goetze (India) Ltd. v. CIT, 284 ITR 323 (SC), concerning the Assessing Officer’s inability to entertain a fresh claim otherwise than through a revised return.
The appellate order also discussed the distinction between retrenchment compensation and voluntary retirement payments.
The assessee challenged these conclusions before the Tribunal, contending that the substantive exemption was available and that the omission in the return did not prevent an appellate authority from considering it.
Appellate Powers Are Not Restricted by Goetze
The assessee argued that the restriction recognised in Goetze (India) concerned the powers of the Assessing Officer and did not curtail the powers of appellate authorities.
She relied on CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd., 349 ITR 336 (Bom.), for the proposition that appellate authorities could admit fresh claims even where they had not been made in the return.
The Tribunal agreed that appellate authorities were not barred from admitting a fresh claim during appellate proceedings.
Thus, the absence of a section 10(10B) claim in the original return did not, by itself, defeat the assessee’s entitlement to have that claim examined.
The Departmental Representative supported the orders of the lower authorities.
BSNL Scheme Examined Through Earlier Decisions
The assessee relied on several Tribunal decisions concerning BSNL VRS-2019, including the Chandigarh decision in Harish Kumar and decisions from other Benches.
The Agra Tribunal particularly followed Prathibha Jagdish Unawane v. ITO and connected appeals, ITA No. 1117/Pun/2026, dated 29 April 2026, involving a batch of 102 appeals.
The reasoning reproduced from the earlier decisions treated the compensation under the BSNL revival arrangement as retrenchment compensation falling under section 10(10B), rather than an ordinary voluntary retirement payment governed by section 10(10C).
Those decisions considered the circumstances surrounding the scheme and the government-approved revival plan. Their approach focused on the substance of the compensation, rather than merely the description “VRS”.
The Agra Tribunal adopted that reasoning for the present assessee.
Full Exemption Allowed for Both Years
For AY 2020-21, the Tribunal expressly held that the disputed amount of ₹9,93,938 received under BSNL VRS-2019 was fully exempt under section 10(10B).
It set aside the first appellate authority’s findings and allowed the grounds raised by the assessee.
For AY 2021-22, the Tribunal found the issue identical, with the only difference being the amount of the claim, namely ₹21,81,583. It applied its findings for the first year to the second year as well.
Accordingly, both appeals were allowed.
Revised Computation and Verification to Follow
The Tribunal directed the assessee to submit a revised computation of income before the jurisdictional Assessing Officer, claiming exemption under section 10(10B).
The Revenue authorities were then directed to compute the tax liability and grant the refund, if any, after due verification of that computation.
This was a finding allowing the exemption, followed by a direction to implement the relief through verification and recomputation. The order did not quantify a final refund payable to the assessee.
The revised computation would also need to correctly account for the exemption already claimed under section 10(10C), so that the same compensation is not deducted twice.
Author’s Comments
The decision provides relief on two connected issues: the tax treatment of compensation under BSNL VRS-2019 and the power of appellate authorities to entertain a claim omitted from the return.
Its procedural significance is substantial. A taxpayer’s earlier return position did not prevent the Tribunal from allowing an exemption supported by the decisions it followed.
The substantive finding is specific to the BSNL VRS-2019 scheme and the reasoning adopted in the cited precedents. It should not be read as granting full section 10(10B) exemption to every payment described as voluntary retirement compensation.
For affected BSNL employees, the practical next step under this order is a proper revised computation, reconciling the compensation, exemption previously claimed, tax paid and consequential refund entitlement.
Cases Discussed
- Harish Kumar v. ITO, ITA No. 42/CHD/2025
- CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd., 349 ITR 336 (Bom.)
- Goetze (India) Ltd. v. CIT, 284 ITR 323 (SC)
- Prathibha Jagdish Unawane v. ITO, ITA No. 1117/Pun/2026
- Jayeshkumar Tulsidas Sutaria v. ITO, ITA Nos. 2387 & 2388/AHD/2025
- Shri Sekar Gnanaprakasam v. DCIT, ITA Nos. 1608 & 1609/CHNY/2026
- Hindustan Photo Film Workers Welfare Centre v. Government of India, 400 ITR 299 (Mad.)
- Vijay Vishin Meghani v. DCIT, 398 ITR 250 (Bom.)
- Vishnu Mohan T Nair v. Income Tax Officer, 61 ITR(T) 796 (Ahmedabad-Trib.)
- Mahendra Singh Dhantwal v. Hindustan Motors Ltd., 20 Taxman 1 / 152 ITR 68 (SC)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT AGRA
These two appeals are directed against the respective impugned orders dated 20.03.2026 and 25.03.2026 passed in appeal No. ADDL/JCIT(A)-2 COIMBATORE/10059/2019-20 and ADDL/JCIT(A)-2 Coimbatore/10047/2020-21 by the ld. ADDL/JCIT(A)-2, Coimbatore (hereinafter referred to as “CIT(A)) u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21 & 2021-22 respectively, wherein ld. CIT(A) has dismissed assessee’s both the appeals.
2. Since both the appeals are inter-related to the same assessee and common question of law and facts is involved therein, they were heard together and are disposed of by this consolidated order for the sake of convenience and brevity. We first take up ITA No. 438/Agr/2026 (A.Y. 2020-21) as a lead case.
ITA No. 438/Agr/2026 (A.Y. 2020-21):
3. Brief facts of the case are that the assessee is an ex-employee of Bharat Sanchar Nigam Limited (BSNL) and during the year as per scheme implemented by the BSNL with the approval of Central Government Notification dated 29.10.2019, the employees opting for earlier retirement under the scheme receive ex gratia compensation, which BSNL termed as ‘retirement benefits’. According to the assessee, she inadvertently offered the said amount to tax in the Income Tax Return after claiming the partial exemption of Rs.5,00,000/- u/s. 10(10C) of the Act. Subsequently, the assessee came to know that vide order dated 30 May, 2025, in the case of Harish Kumar (BSNL Employee) vs. ITO (ITA No. 42/CHD/2025), it was held by the Chandigarh Bench of Tribunal that the compensation received under the BSNL Voluntary Retirement Scheme (VRS), 2019 was fully exempt under section 10(10B) of the Act. The assessee submits that the return filed by the appellant was processed by the learned AO, CPC, wherein the returned income was accepted and according to the assessee, the CPC erred in not allowing exemption when the appellant was eligible for the same. The assessee submits that the assessee filed an appeal before the learned CIT(A) for claiming exemption u/s. 10(10B) of the Act on ex gratia compensation received during the year. In this regard, the statement of facts filed by the assessee is reproduced as under:
“1. That the appellant is resident individual.
2. During the year in question, the appellant has received salary income, ex-gratia received from Controller of Communication Accounts Uttar Pradesh Telecom Circle and Bharat Sanchar Nigam Limited (BSNL).
3. A Scheme was implemented by BSNL, with the approval of the Central Government notification dated 29.10.2019, as part of a financial restructuring and employee cost reduction initiative. Employees opting for early retirement under the scheme received Ex-Gratia compensation, which BSNL termed as retirement benefits.
4. The ex-gratia amount received from BSNL was inadvertently offered to tax in the income tax return, after claiming a partial exemption of INR 5,00,000 under section 10(10C). The said income was offered to tax due to a lack of clarity in the provisions of the Income Tax Act.
5. Subsequently vide order dated 30 May 2025, in the case of Harish Kumar (BSNL Employee) vs ITO (ITA No. 42/CHD/2025), it was held that compensation received under the BSNL Voluntary Retirement Scheme (VRS), 2019 is fully exempt under section 10(10B) of the Act.
6. The return filed by the appellant was processed by Ld. AO (CPC) wherein returned income was accepted. Ld. AO. (CPC) erred in not allowing exemption when the appellant is eligible for the same.
7. Aggrieved from the above, this appeal is being preferred before your honour to claim exemption under section 10(10B) of the Act on ex-gratia received during the year.”
3.1 The learned CIT(A) did not accept the above plea of the assessee and rejected the same. The learned CIT(A) held that the assessee was not eligible for deduction u/s. 10(10B) of the Act, as the same is applicable to the compensation received by a working man at the time of his retrenchment under the Industrial Disputes Act, 1947 or under any scheme approved by the Central Government but not on the compensation received on account of voluntary retirement or separation. Further, the learned CIT(A) also held that the appellant failed to report the exemption in Income Tax Return for the year under consideration and the claim for exemption u/s. 10(10B) has been raised for the first time during the appellate proceedings. The ld. CIT(A) held that it constitutes a fresh claim, which cannot be accepted in the present appellate proceedings and accordingly, the exemption claimed u/s. 10(10B) of the Act cannot be granted. Thereafter, the learned CIT(A) relied upon the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC) which held that a fresh claim not made in the return requires revised return and held that in view of this, the AO was having no power to entertain new claim as made by assessee at the appellate stage for the first time. The relevant extract of the order of learned CIT(A) is reproduced as under :
“5.6.1 As per discussion the issue regarding the applicability of exemption u/s.10(10B) is not under dispute and the assesse can claim full exemption u/s.10(10B) but in the instant case the appellant failed to report the exemption in income tax return for the year under consideration.
6. The appellant received Rs.9,93,938/-from BSNL Voluntary Retirement Scheme, 2019. No exemption was claimed in the return for the entire amount either under section 10(10B) and section 10(10C). Section 10(10B) provides exemption for any compensation received by a workman at the time of his retrenchment to the extent prescribed and where retrenchment is on closure of undertaking, the whole amount is exempt. The appellant did not report or claim such exemption in the return of income filed under section 139(1) nor by filing a revised return under section 139(5) of the Act. The claim for exemption under section 10(10B) has been raised for the first time during the appellate proceedings. In the absence of such a claim in the return of income and without any revised return the same constitutes a fresh claim, which is not acceptable in the present appellate proceedings. Accordingly, the exemption under section 10(10B) cannot be granted.
7. The Hon’ble Supreme court in the case of Goetze (India) Ltd. vs CIT [2006] 284 ITR 323 (SC), that a fresh claim not made in return requires revised return. This reinforces that the AO acted within law while processing of return. It is a well settled law that the Assessing Officer does not have the power to entertain a fresh claim raised before him otherwise than by filing a revised return. Followings the findings of the Apex Court the AO has no power to entertain the new claim and the action of AO is correct.
8. Based on the Act, detailed submissions filed and absence of supporting evidence on record, the exemption claim does not arise from a self-evident mistake. The appellate authority does not possess the authority to direct the JAO to enter a new claim in the Income Tax Return (ITR). Likewise, the Assessing Officer (AO) is not permitted to modify any claims submitted by the appellant in the return or to enter a new claim on behalf of the appellant. It is incumbent upon the appellant to avail other remedial action under section before the appropriate authority if any available. The order issued by the CPC is deemed correct and the grounds raised by the appellant are hereby dismissed.
9. In the result the appeal is DISMISSED.”
4. Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal :
“1. That on the facts, circumstances and legal position of the case, the Worthy JCIT(A)-2, Coimbatore in Appeal No. ADDL/JCIT (A)-2 COIMBATORE/10059/2019-20 has erred in passing order dtd. 20.03.2026 in contravention of provisions of S. 250 of the Income Tax Act, 1961 (hereinafter referred to as “Act”).
2. That the Worthy JCIT(A) erred in law and on facts in not allowing exemption of INR 9,93,938 [INR 5,00,000 already claimed as exemption u/s 10(10C)] received by the appellant as ex-gratia compensation under BSNL Voluntary Retirement Scheme, 2019, which is fully exempt u/s 10(10B) of the Act, as held by Hon’ble ITAT, Chandigarh in the case of Harish Kumar v. ITO (ITA No. 42/Chd/2025) and other judicial precedents.
3. That the Worthy JCIT(A) erred in holding that a fresh claim of exemption cannot be entertained in appellate proceedings, ignoring binding precedents such as CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. (349 ITR 336, Bom.), which categorically held that appellate authorities are empowered to admit fresh claims even if not made in the original return.
4. That the Worthy JCIT(A) erred in misapplying the ratio of Goetze (India) Ltd. v. CIT (284 ITR 323, SC), which is limited to powers of the Assessing officer and does not restrict the powers of appellate authorities to admit fresh claims.
5. That the Worthy JCIT(A) has erred in ignoring the CBDT circular No. 14 of 1955 whereby officers of the income tax department are directed not to take advantage of the ignorance of an assessee as to his rights.
6. That the appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal at the time of hearing.”
5. At the outset, the learned AR submitted that this issue is squarely covered in favour of the assessee by various orders of Tribunal. In this regard, the relevant extracts of the submission of the assessee are reproduced as under :
“4.4 The employer (BSNL) has wrongly treated the ex-gratia has VRS whereas Hon’ble ITAT Chandigarh in the case of Harish Kumar vs ITO (2025) 175 taxmann.com 379 has treated the entire compensation as capital receipt and considered it as Retrenchment Compensation as the Appellant was forced to opt for VRS under the compelling circumstances which has been noticed by ITAT Chandigarh Bench in the case of Harish Kumar and therefore, it has been treated as a capital receipt and not liable to tax.
4.5 Further, it is humbly submitted that Hon’ble Tribunals have allowed exemption under section 10(10B) of the Act in entirety on VRS amount paid to BSNL employee and held that it is case of retrenchment. Reliance in this regard is placed on the below rulings-
a. ITAT Delhi in the case of Vinod Kumar Madan, ITA No. 4698/4699/Del/2026
b. ITAT Pune in the case of Prathibha Jgadish Unawane & Ors (Batch of 102 appeals), ITA No. 1117/Pun/2026
c. ITAT Mumbai in the case of Bajirao Shankar Jagdale, ITA No. 1389/Mum/2026
d. ITAT Ahmedabad in the case of Jayeshkumar Tulsidas Sutaria, ITA No. 2387 & 2388/AHD/2025
e. ITAT Chennai in the case of Shri Sekar Gnanaprakasam, ITA No. 1608 & 1609/CHNY/2026
f. ITAT Bangalore in the case of Renuka Narsimha Prabhu & Ors, ITA No. 992/BANG/2026
g. ITAT Guwahati in the case of Kanauj Kanti Chaudhuri & Ors (Batch of 47 appeals), ITA No. 258/GTY/2026
h. ITAT Panaji in the case of Shivnandan Narendra Sanvordekar & Manuel Santan Fernandes, ITA No. 141 to 144/PAN/2026
i. ITAT Hyderabad in the case of Nizamuddin Gooty and Ors. (Batch of 14 appeals), ITA No. 903 & 904/Hyd/2026, extract is reproduced below:
“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.”
5.1 Further, with respect to the observations of learned CIT(A) that a fresh claim of exemption cannot be entertained in appellate proceedings, learned AR submitted that the Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders (P) Ltd. [349 ITR 336(Bom.)] held that appellate authorities are empowered to admit fresh claims even if not made in the original return. Learned AR also submitted that the ld. CIT(A) erred in misapplying a ratio of Goetze (India) Ltd. (supra), which limited the powers of the AO and does not restrict the powers of appellate authorities to admit fresh claims.
6. On the other hand, learned Sr. DR supported the orders of the authorities below.
7. We have heard both the parties and perused the material on record. During the year, the assessee had received ex gratia payment of Rs.9.93.938/- from BSNL in pursuance of the BSNL Voluntary Scheme, 2019. The assessee has now claimed that the said amount was exempt u/s. 10(10B) of the Act as held by the co-ordinate Bench of Chandigarh in the case of Harish Kumar vs. ITO (ITA No. 42/CHD/2025) and other judicial precedents. Further, the assessee submits that the said claim was not made in the original return of income as there was lack of clarity on the taxability of the said amount. 7.1 From the perusal of the various orders of the Tribunal, we find that the issue regarding the claim of exemption on the amount of Rs.9,93,938/- was held to be fully allowable u/s. 10(10B) of the Act. Further, we also agree with the submission of the assessee that the appellate authorities are not barred by admitting the fresh claim during the appellate proceedings. On similar facts, the Pune Bench of the Tribunal in the case of Prathibha Jagdish Unawane vs. ITO (ITA No. 1117/Pun/2026) and others (batch of 102 appeals) by an order dated 29.04.2026 had allowed such claim of the assessee for exemption u/s 10 (10B) of the Act in respect of similar compensation received under the BSNL Voluntary Retirement Scheme (VRS), 2019 where the assessee did not make the claim in the return of income and made the claim for the first time before the learned CIT(A). In this regard, the relevant extract of the order is reproduced as under :
“8. We are of the considered opinion that Ld.CIT(A) should have condoned the delay as assessee had filed elaborate explanation regarding delay and there was sufficient cause for delay. These Assessees have filed Returns of Income based on professional Advice received at that point of time. However, subsequently they made revised claim before CIT(A).
8.1 Substantial justice is more important than the procedural delay. The Hon’ble Bombay High Court in the case of Vijay Vishin Meghani vs DCIT [2017] 398 ITR 250 (Bombay) has condoned the delay of 2984days , which was on account of professional advice of a CA.
9. The identical issue of BSNL employees is decided by ITAT Pune in favour of assessee in ITA Nos.290 and 293/PUN/2026,ITA Nos.294 and 295/PUN/2026. ITAT Pune has relied on the decision of ITAT Ahmedabad in the case of Jayeskumar Sutaria vs ITO ,ITAT has extensively reproduced the decision and finally allowed the appeal of the assessee. The relevant paragraph of the said order is reproduced here under :
Quote, “15. Further, I find the Coordinate Bench, Ahmedabad in the case of Jayeshkumar Tulsidas Sutaria Vs. ITO (supra) following the decision of Coordinate Bench, Chandigarh in the case of Harish Kumar vs. ITO Ward- 5(5), Chandigarh -ITA No. 42/CHD/2025 order dated 30.05.2025 has decided the issue in favour of the assessee by observing as under :
“3. The assessee was employed with Bharat Sanchar Nigam Limited (BSNL), a Government of India enterprise. BSNL notified the Voluntary Retirement Scheme (VRS) 2019 on 04.11.2019, which was duly approved and implemented by the employer. The assessee opted for the scheme and accordingly received compensation under the VRS, as per the terms laid down by BSNL. It is submitted that the assessee had not been paid regular salary for several months prior to opting for the scheme and was under severe financial and professional uncertainty. In view of these circumstances, the assessee opted for the scheme as a measure of financial security. The compensation received by the assessee was in the nature of compensation under the BSNL VRS-2019 scheme. The compensation amount received under the scheme was offered to tax in the return of income due to lack of awareness regarding the exemption available under section 10(10B) of the Income-tax Act, 1961. The employer had also deducted tax at source on the said amount. No exemption was claimed in the original or revised return of income. The CPC, Bengaluru issued an intimation under section 143(1) for the said year without granting any exemption, and no rectification or appeal was initiated at that time. It was only upon learning about the recent judgment of the Hon’ble ITAT Chandigarh Bench in the case of Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025, dated 30.05.2025) that the assessee became aware that the compensation received under the BSNL VRS-2019 scheme is eligible for exemption under section 10(10B), subject to compliance with Rule 2BA.
4. Aggrieved by the orders of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who dismissed the appeal of the assessee as non maintainable by observing as follows:
“…In the present case, the delay in filing of the appeal is almost four years which is an inordinate and huge delay. Moreover, as has been elaborately discussed above, the appellant has also failed to provide any reasonable ground that could assist the first appellate authority to draw sufficient cause for the inordinate delay of 1,396 days in filing of this appeal. The inordinate delay in the present case, if condoned, would make the term ‘’Sufficient cause” in section 249(3) of the Income Tax Act, 1961 hollow and meaningless.
20. In light of the facts of the case, provisions of the Income Tax Act, 1961 and judicial decisions in the matter as discussed above, I am constrained to conclude that the appellant has failed to submit any reasonable ground for condoning the inordinate delay of 1,396 days i.e almost four years in filing this appeal. Being bereft of any sufficient cause as envisaged in section 249(3) of the Act, the appeal cannot be admitted. Since the appeal is not maintainable, there is no need to adjudicate on the merits therein.
5. Aggrieved by the orders of the Ld.CIT(A, the assessee is in further appeal before us.
6. We have gone through the records and considering the merits of the case, we condoned the delay and proceed to adjudicate the issue.
7. The Ld. Counsel for the assessee submitted that due to lack of awareness of the legal provisions at the time of filing the return of income, the assessee inadvertently offered the compensation received under BSNL VRS-2019 to tax. Subsequently, based on the decision of the Hon’ble ITAT Chandigarh Bench in Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), wherein compensation under the same BSNL VRS-2019 scheme was held to be exempt under section 10(10B), the assessee now seeks exemption of such compensation. We find that the assessee filed the claim before the Ld. CIT(A) and since the income of the assessee is not taxable, the assessee is eligible for the refund of the TDS.
8. In the result, both the appeals of the assessee are allowed.”
16. The contention of ld. DR that only a ‘workman’ as defined under the Act is eligible for benefit u/s.10(10B) of the Act has no force as the Hon’ble High Court of Madras in the case of Hindustan Photo Film Workers Welfare Centre vs. Govt. of India (2018) 400 ITR 299 (Madras) has held that benefit u/s.10(10B) would be applicable to all employees covered by the scheme.
17. In light of the above decisions which are squarely applicable on the facts of instant cases and the consistent view taken by the Coordinate Benches, I am of the considered view that the alleged sum is in the nature of Retrenchment Compensation received by the assessee(s) in appeal, under the forced retirement scheme as per the standing orders dated 29.10.2019 issued by the Union Cabinet for the revival plan of BSNL/MTNL and such compensation falls under the provisions of section 10(10B) of the Act and not u/s.10(10C) of the Act and therefore the alleged sum is in the nature of Capital receipt exempt from tax. In order to get relief as has been directed in this order, assessee(s) are directed to place revised computation of income before the respective Jurisdictional Assessing Officers claiming the exemption u/s.10(10B) of the Act as discussed (supra) and thereafter the Revenue authorities shall grant the refund (if any) entitled to the assessee(s) after due verification of such revised computation of income. Impugned findings of ld.CIT(A) are set aside. Common issue raised in the Grounds of appeal raised by respective assessee(s) stands allowed.”
9. Since the facts in the instant bunch of appeals are same, therefore, following the same parity of reasoning, I hold that the alleged sum received under BSNL Voluntary Retirement2019 Scheme is in the nature of Retrenchment Compensation received by the assessee(s) in appeal and such compensation falls under the provisions of section 10(10B) of the Act and not u/s.10(10C) of the Act and is in the nature of Capital receipt exempt from tax. Assessee(s) are directed to place revised computation of income before the respective Jurisdictional Assessing Officers claiming the exemption u/s.10(10B) of the Act of the alleged sum and thereafter the Revenue authorities shall compute the tax liability and grant the refund (if any) entitled to the assessee(s) after due verification of such revised computation of income. Impugned findings of ld.CIT(A) are set aside and the common issue raised in the Grounds of appeal by respective assessee(s) stands allowed.” Unquote.
10. Before us the Ld.AR also filed copies of the Orders of CIT(A) who have condoned the delay in identical facts and allowed the appeal of the assessee who were BSNL employees.
11. In following cases the CIT(A) has condoned the delay and allowed those BSNL employees Appeal on identical facts. It was submitted by Ld.AR that in these cases the Department has not filed any appeal. Ld.DR has not rebutted it. Thus, it is observed that CIT(A)’s have been taking different stand on identical issues. Consistency in judicial decisions is very important.
| Sr. No. | Date | Assessee Name | Particulars | Page No. |
|---|---|---|---|---|
| 1 | 27/11/2025 | Bhuvneshwar Pandit Tambat | Order under section 250 Act | 1-24 |
| 2 | 28/11/2025 | Shripathi Rao Padubidri Govinda | Order under section 250 Act | 25-33 |
| 3 | 12/12/2025 | Ajay Pandurang Patil | Order under section 250 Act | 34-51 |
| 4 | 12/12/2025 | Ghanshyam Vitthal Dhond | Order under section 250 Act | 52-72 |
| 5 | 12/12/2025 | Ravindra Sahadu Patil | Order under section 250 Act | 73-89 |
| 6 | 12/12/2025 | Umrao Kerba Kore | Order under section 250 Act | 90-106 |
| 7 | 22/12/2025 | Youraj Raghunathrao Pawar | Order under section 250 Act | 107-141 |
| 8 | 22/12/2025 | Valmik Vedu Patil | Order under section 250 Act | 142-16- |
| 9 | 29/12/2025 | Sunil Ramlingappa Gulave | Order under section 250 Act | 161-186 |
| 10 | 29/12/2025 | Mary Cruz Janet Francis | Order under section 250 Act | 187-212 |
| 11 | 31/12/2025 | Rajendra Babulal Takle | Order under section 250 Act | 213-227 |
| 12 | 06/01/2026 | Devendra Vishwarao Sonawane | Order under section 250 Act | 228-259 |
| 13 | 05/03/2026 | Niva Baruah | Order under section 250 Act | 260-265 |
12. We have perused the submission of the Ld.DR. Ld. DR has not brought on record any contrary decision of Hon’ble High Court. We also find support from the decision of ITAT Ahmedabad in the case of Vishnu Mohan T Nair v. Income Tax Officer, [ 2018] 61 ITR(T) 796 (Ahmedabad- Trib.), the operative portion of the said order is extracted below:
“While on this subject, it is also useful to take note of Hon’ble Supreme Court’s judgment in the case of Mahendra Singh Dhantwal v. Hindustan Motors Ltd. [1985] 20 Taxman 1/152 ITR68, wherein compensation in lieu of reinstatement was treated as eligible for retrenchment compensation under section 10(10B). To us, the takeaway from this judgment seems to be that it is not the form but the substance that matters so far definition of retrenchment compensation is concerned. Right now we are dealing with an employee who is giving up his source of livelihood under the threat of dislocation, and the hyper technical interpretations based on technicalities about the wordings in the settlement deed, signed by him under these compelling circumstances, is being taken as the understanding about assessee’s actual conduct; that is too pedantic an approach and it cannot meet our approval. Let us also not forget that while taking calls on these issues, which deal with employees in the lower rung of hierarchy, we must not be too pedantic or hyper technical in approach. We have to be pragmatic in approach and we must give full effect to the true intent of the public welfare provisions. To us, the arrangement in question is nothing but a termination of employment with the offer of compensation. Viewed thus, the payment in question cannot be anything but retrenchment compensation.
10. In our considered view, the conditions of section 10(10B), so far as eligibility for exemption is concerned, is satisfied. That, however, is not the end of the matter”.
13. However, we are bound by the decision of ITAT Pune on identical facts mentioned above. Respectfully following the decision of ITAT Pune (supra), ITAT Ahmedabad & ITAT Chandigarh, we hold that the impugned amounts were exempt from tax. Assessee(s) are directed to place revised computation of income before the respective Jurisdictional Assessing Officers claiming the exemption u/s.10(10B) of the Act of the alleged sum and thereafter the Revenue authorities shall compute the tax liability and grant the refund (if any) entitled to the assessee(s) after due verification of such revised computation of income. Impugned findings of ld.CIT(A) are set aside and the common issue raised in the Grounds of appeal by respective assessee(s) stands allowed.
14. Accordingly, Appeals of the assessee(s) are allowed.”
7.2 Respectfully following the above order of the Co-ordinate Bench of Pune Tribunal on similar facts, we hold that the impugned amount of Rs. 9,93,938/- received by the assessee under the BSNL Voluntary Retirement Scheme (VRS), 2019 was fully exempt under section 10(10B) of the Act. Accordingly, we direct the assessee to place revised computation of income before the respective jurisdictional Assessing Officer claiming the exemption u/s. 10(10B) of the Act of the impugned sum and thereafter the Revenue authorities shall compute the tax liability and grant the refund (if any) entitled to the assessee after due verification of such revised computation of income. Impugned finding of the ld. CIT(A) is set aside and the issues raised in the grounds of the appeal by the assessee are allowed. Accordingly, the appeal stands allowed.
ITA No. 439/Agr/2026 (A.Y. 2021-22):
8. The issue involved in this appeal is identical to that involved in ITA No. 438/Agr/2026 for A.Y. 2020-21. The only difference is in the quantum of appellant’s claim, which in the present appeal is of Rs.21,81,583/-. Hence, our aforesaid order in ITA No. 438/Agr/2026 shall apply mutatis mutandis in this appeal too. Accordingly, the grounds raised in this appeal also stand allowed.
9. In the result, both the appeals filed by the assessee stand allowed in the terms indicated above.
Order pronounced in the open court on 06/ 10 /2026.
