Vadone Krishnamurthy Rao Jamuna Vs ITO (ITAT Bangalore)
Double Retirement Relief for BSNL Employee: VRS Compensation Fully Exempt u/s 10(10B) & ₹25-Lakh Leave Encashment Limit u/s 10(10AA) Applied Retrospectively—Bangalore ITAT
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal allowed both appeals filed by Vadone Krishnamurthy Rao Jamuna for AYs 2020-21 and 2021-22. The first issue concerned ex gratia compensation received under the BSNL Voluntary Retirement Scheme, 2019. The assessee received Rs. 12,55,224/- in AY 2020-21 and Rs. 27,55,075/- in AY 2021-22. In AY 2020-21, he had claimed only Rs. 5 Lakhs exemption under section 10(10C), while no exemption was claimed in AY 2021-22. The returns were processed under section 143(1). The claim that the compensation was exempt under section 10(10B) was raised for the first time before the CIT(A), but the CIT(A) dismissed the appeals on delay without entertaining the fresh claim.
Before the Tribunal, the assessee relied upon a series of Coordinate Bench decisions concerning BSNL VRS, 2019. The Tribunal recorded ten such decisions from the Chandigarh, Ahmedabad, Pune, Mumbai, Chennai and Bangalore Benches, including Harish Kumar vs ITO Ward 5(5) Chandigarh, Suman Nandlal Rava, Hayeshkumar Tulsidas Sutaria, Shraddha Prahlad Arote and Others, Meghmala Sudhir Pathak and Others, Rajendra Himmatrao Pati and Others, Bajirao Shankar Jagadale, Prathibha Jagadish Unawane and Others, Sri Sekar Gnanaprakasham, and Renuka Narasimha Prabhu and Others. It found that the Coordinate Benches had consistently held that retrenchment compensation received from BSNL was allowable as an exemption under section 10(10B). Following those precedents, the Tribunal directed the AO to allow exemption under section 10(10B) in respect of compensation received under the BSNL VRS-2019 Scheme, subject to verification of necessary details.
The second issue concerned accumulated leave encashment. For AY 2020-21, the assessee received Rs. 11,95,420/- from BSNL and had claimed exemption of Rs. 10,16,110/- under section 10(10AA). The Tribunal relied upon the Coordinate Bench decision in Narendra Kumar Mishra vs. ITO, ITA No. 233/Ind./2025, etc., order dated 27.02.2026, which held that the revised Rs. 25 Lakh limit under CBDT Notification No. 31 of 2023 for section 10(10AA) exemption applied retrospectively. Respectfully following that decision, the Tribunal directed the AO to grant the benefit of the revised exemption limit.
Thus, both appeals were allowed. The Tribunal’s operative relief was subject to verification where expressly directed, and the order was pronounced in the open court on 31-Aug-2026.
Cases Discussed
- Harish Kumar vs ITO Ward 5(5) Chandigarh — ITAT Chandigarh, ITA No. 42/CHD/2025 dated 30-05-2025.
- Suman Nandlal Rava; vs ITO WARD 1 Gandhinagar — ITAT Ahmedabad, ITA Nos. 2389 & 2393/Ahd/2025, order dated 18-02-2026.
- Hayeshkumar Tulsidas Sutaria vs ITO WARD 7(2)(1) Ahmadabad — ITAT Ahmedabad, ITA Nos. 2387 & 2388/Ahd/2025 dated 17-02-2026.
- Shraddha Prahlad Arote and Others vs ITO WARD 2, Ahmednagar — ITAT Pune, Nos. 262 and 261/PUN/2026 dated 24-03-2026.
- Meghmala Sudhir Pathak and Others vs ITO WARD 2(1), Nashik — ITAT Pune, Nos. 290 and 293/PUN/2026 dated 24-03-2026.
- Rajendra Himmatrao Pati and Others vs ITO WARD 1(4) Jalagon — ITAT Pune, Nos. 302 and 303/PUN/2026 dated 27-03-2026.
- Bajirao Shankar Jagadale vs ITO WARD 42(2)(1), Mumbai — ITAT Mumbai, ITA No. 1389/Mum/2026 dated 10-04-2026.
- Prathibha Jagadish Unawane and Others vs ITO Kolhapur etc — ITAT Pune, ITA No. 1117/PUN/2026 dated 29-04-2026.
- Sri Sekar Gnanaprakasham v. The Deputy Commissioner of Income TAX — ITAT Chennai, ITA Nos. 1608 & 1609/CHNY/2026, order dated 21.05.2026.
- Renuka Narasimha Prabhu & Others v. ITO — ITAT Bangalore SMC Bench, ITA Nos. 992, 1005, 1284, 1285, 1320, 1342 & 1427/BANG/2026, order dated 29.05.2026.
- Narendra Kumar Mishra vs. ITO — ITAT Indore, ITA No. 233/Ind./2025, etc., order dated 27.02.2026.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, BANGALORE
The assessee has filed the present appeals against the separate impugned orders of even date 21.02.2026, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals)-2, Coimbatore, [“learned Addl./Joint CIT(A)”], for the assessment years 2020-21 and 2021-22.
2. The first issue that arises for consideration pertains to the claim of exemption under section 10(10B) of the Act in respect of the compensation received on retrenchment under the BSNL Voluntary Retirement Scheme, 2019 (“BSNL VRS, 2019”).
3. The brief facts of the case are that the assessee was an employee with BSNL, which is under the administrative control of the Department of Telecommunications, Government of India. In order to revive BSNL, the Union Cabinet, in its meeting, approved the revival plan of BSNL and MTNL vide office memorandum dated 29.10.2019 issued by the Department of Telecommunications. As part of the revival package, the Government decided to reduce the workforce through the BSNL VRS, 2019, of the employees aged 50 years and above. It was further decided that on such voluntary retirement, ex gratia compensation shall be paid. Accordingly, the assessee received ex gratia compensation of Rs. 12,55,224/- for the assessment year 2020-21 and Rs. 27,55,075/- for the assessment year 2021-22, computed in accordance with the BSNL VRS, 2019. The assessee, not being properly advised, claimed exemption of Rs. 5 Lakhs under section 10(10C) of the Act instead of claiming the exemption under section 10(10B) of the Act for the assessment year 2020-21, while for the assessment year 2021-22, no exemption was claimed by the assessee. The assessee’s returns were processed vide intimation issued under section 143(1) of the Act, accepting the return of income. Admittedly, in the present case, the claim that the entire amount of the retrenchment compensation received from the BSNL is not taxable as per the provisions of section 10(10B) of the Act was made for the first time before the learned CIT(A). However, the learned Addl./Joint CIT(A) dismissed the appeal on account of the delay without entertaining the fresh claim made by the assessee.
4. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the issue of claiming the benefit of exemption under section 10(10B) of the Act in respect of the retrenchment compensation received from BSNL is no longer res integra and has been decided consistently in favour of the taxpayers by various benches of the Tribunal. In this regard, learned AR placed reliance upon the following decisions: –
1. Order of ITAT Chandigarh ITA NO. 42/CHD/2025 dated 30-05-2025, in the case of Harish Kumar vs ITO Ward 5(5) Chandigarh .(Page 01 -08 of Paperbook)
2. Order of ITAT Ahmedabad ITA Nos 2389 & 2393 /Ahd/2025 date of order 18-02-2026 Suman Nandlal Rava; vs ITO WARD 1 Gandhinagar. (Page 44-48 of Paperbook)
3. Order of ITAT Ahmedabad ITA Nos.2387 & 2388/Ahd/2025 dated 17-02-2026, Hayeshkumar Tulsidas Sutaria vs ITO WARD 7(2)(1) Ahmadabad. (Page 49-54 of Paperbook)
4. Order of ITAT Pune Nos 262 and 261/PUN/2026 dated 24-03-2026 in the case of Shraddha Prahlad Arote and OTHERS vs ITO WARD 2, Ahmednagar ( Page 55-73 of Paperbook)
5. Order of ITAT Pune Nos 290 and 293/PUN/2026 Dated 24-03-2026 in the case of Meghmala Sudhir Pathak and OTHERSvs ITO WARD 2(1), Nashik ( Page 74-92 of Paperbook)
6. Order of ITAT Pune Nos 302 and 303/PUN?2026 date of order 27-03-2026 in the case of Rajendra Himmatrao Pati and OTHERSvs ITO WARD 1(4) Jalagon. (Page 93-105 of Paperbook)
7. Order of ITAT MUMBAI ITA 1389/Mum/2026 date of order 10-04-2026 in the case of Bajirao Shankar Jagadale vs ITO WARD 42(2)(1), Mumbai (Page 106-113 of Paperbook)
8. Order of ITAT Pune ITA 1117/PUN/2026 date of order 29-04-2026 in the case of Prathibha Jagadish Unawane and OTHERS vs ITO Kolhapur etc (Page 114-119 of Peperbook)
9. Order of Hon’ble ITAT Chennai, in Sri Sekar Gnanaprakasham v. The Deputy Commissioner of Income TAX (ITA No. 1608&1609/CHNY/2026, order dated 21.05.2026)(Page number 250-259 of Paperbook)
10. Order of Hon’ble ITAT Bangalore SMC Bench, in Renuka Narasimha Prabhu & Others v. ITO (ITA No. 992,1005,1284,1285,1320,1342&1427/BANG/2026, order datd 29.05.2026)(Page number 260-270 of Paperbook)
5. Having carefully perused the aforesaid decisions, we find that in similar circumstances the Coordinate Benches of the Tribunal held that the retrenchment compensation received from the BSNL is allowable as an exemption under section 10(10B) of the Act. Accordingly, respectfully following the judicial precedents in favour of the assessee, the AO is directed to allow exemption under section 10(10B) of the Act to the assessee in respect of compensation received under the BSNL VRS – 2019 Scheme, subject to verification of the necessary details. Accordingly, grounds raised by the assessee on this issue in both appeals are allowed.
6. The next issue that arises for our consideration pertains to the exemption under section 10(10AA) of the Act in respect of accumulated leave encashment pertaining to service under the BSNL.
7. The brief facts of the case are that for the assessment year 2020-21, the assessee received Rs. 11,95,420/- towards accumulated leave encashment from the BSNL. The assessee, while filing his return of income, claimed exemption only to an extent of Rs. 10,16,110/- under section 10(10AA) in respect of accumulated leave encashment of Rs. 11,95,420/- pertaining to service under the BSNL. We find that the Coordinate Bench of the Tribunal in Narendra Kumar Mishra vs. ITO, in ITA No. 233/Ind./2025, etc., vide order dated 27.02.2026 held that the revised limit of Rs. 25 Lakh as per the CBDT notification No. 31 of 2023 for claiming exemption under section 10(10AA) of the Act shall be applicable retrospectively. During the hearing, the learned AR submitted that in various other decisions of the Coordinate Bench of the Tribunal, similar filings have been rendered extending the benefit of the Notification to the period prior to the said Notification. Accordingly, respectfully following the decision of the Coordinate Bench cited supra, the AO is directed to grant the benefit of the revised limit of exemption under section 10(10AA) to the assessee. With the above direction, the grounds raised by the assessee on this issue in the appeal for the assessment year 2020-21 are allowed.
8. In the result, both appeals by the assessee are allowed.
Order pronounced in the open court on 31-Aug-2026.
