Kulkarni Jagadish Vs ITO (ITAT Pune)
BSNL Retirement Compensation: ₹5 Lakh Ceiling Gives Way to Full Exemption
The Pune ITAT, in Kulkarni Jagadish v. ITO, held that compensation received under the BSNL Voluntary Retirement Scheme, 2019 was exempt under Section 10(10B), following earlier Tribunal decisions treating the payment as retrenchment compensation. The Tribunal also held that the assessee’s explanation justified condonation of the delay in filing appeals and directed the Assessing Officer to verify revised computations and grant the consequential refund, if any.
The Dispute: Voluntary Retirement or Retrenchment Compensation?
The assessee, a former employee of Bharat Sanchar Nigam Limited, filed appeals concerning Assessment Years 2020-21 and 2021-22. The dispute arose from compensation received under the BSNL Voluntary Retirement Scheme, 2019, introduced as part of the Government’s revival package for BSNL and MTNL.
The Union Cabinet approved the revival plan on 23 October 2019, followed by the Department of Telecommunications’ Office Memorandum dated 29 October 2019. Reduction of the workforce through a retirement scheme for employees aged 50 years and above formed part of that package. Employees opting for retirement received ex gratia compensation.
In his returns, the assessee had claimed exemptions under Sections 10(10C) and 10(10AA). During processing under Section 143(1), the CPC restricted the claim under Section 10(10AA). Before the first appellate authority, the assessee raised a further claim that the entire retirement compensation constituted an exempt capital receipt under Section 10(10B).
