Venkata Yagneswarasastry Jayanthi Vs ITO (ITAT Visakhapatnam)
Summary: A batch of 26 appeals concerned employees of Bharat Sanchar Nigam Limited (BSNL) who opted for the Voluntary Retirement Scheme–2019 and received compensation/ex-gratia, which they had originally offered to tax. The returns were processed under Section 143(1) of the Income-tax Act, 1961. The assessees subsequently claimed exemption under Section 10(10B), contending that the compensation was retrenchment compensation. The respective appellate authorities had dismissed appeals in cases involving delays ranging from about 1,000 to 2,000 days, declined to entertain fresh exemption claims at the appellate stage in some cases, and in other cases treated the compensation as voluntary retirement compensation governed by Section 10(10C). The Visakhapatnam ITAT, following the decision of the ITAT Bengaluru Bench in Basappa Balarama and Murthy Rangappa and considering similar treatment in other BSNL employee cases, condoned the delays wherever applicable. On merits, after considering the judicial precedents referred to by the assessees, including the ITAT Chennai decision in Shri Sekar Gnanaprakasam and the Telangana High Court decision in Sri Vissamsetty Ramakrishna, the Tribunal held that compensation received by the assessees under BSNL VRS–2019 is exempt under Section 10(10B) and directed the Assessing Officer to verify the claims, allow the exemption in accordance with law and determine the consequential tax payable/refundable, if any. The Tribunal also admitted additional grounds concerning exemption of leave salary under Section 10(10AA)(i), following National Thermal Power Corporation Ltd. v. CIT, and considered the decision of the Kerala High Court in Sanchar Nigam Pensioners Welfare Association v. Union of India. As the necessary facts for verification were not readily available, the leave salary exemption issue was set aside to the Assessing Officer for verification and decision in light of Section 10(10AA)(i), its conditions and the Kerala High Court decision. All the appeals were ultimately allowed for statistical purposes.
BSNL VRS-2019 Compensation Fully Exempt Under Section 10(10B); Visakhapatnam ITAT Condones Delays up to 2,000 Days
A batch of 26 appeals concerned BSNL employees who opted for the Voluntary Retirement Scheme, 2019 and received ex gratia compensation. The employees had originally offered the compensation to tax, and their returns were processed under Section 143(1). Subsequently, relying on favourable judicial decisions, they claimed that the compensation was effectively retrenchment compensation and was fully exempt under Section 10(10B).
The appellate authorities rejected the claims in several cases because the appeals were delayed by approximately 1,000 to 2,000 days, while in other cases they held that a fresh exemption claim could not be entertained without a revised return. Some authorities also treated the receipts as ordinary VRS compensation governed by Section 10(10C), rather than retrenchment compensation under Section 10(10B).
The Visakhapatnam ITAT observed that various Tribunal benches had consistently condoned similar delays involving BSNL retirees and allowed the exemption. Considering the employees’ ignorance of the legal position, incorrect professional advice and the subsequent development of favourable judicial precedents, the Tribunal condoned the delay wherever applicable.
On merits, the Tribunal held that compensation received under BSNL VRS-2019 was eligible for complete exemption under Section 10(10B). It directed the AO to verify the individual claims, allow the exemption and determine the consequential tax refund or liability in accordance with law.
Certain employees also raised an additional claim for exemption of leave encashment under Section 10(10AA)(i). The Tribunal admitted this legal ground and restored it to the AO for verification in light of the Kerala High Court’s ruling in Sanchar Nigam Pensioners Welfare Association v. Union of India, which recognised the eligibility of BSNL employees for such exemption.
List of Cases Discussed / Relied Upon
- Goetze (India) Ltd. Vs CIT,[2006] 157 Taxman 1 / 284 ITR 323 (SC) — cited in relation to the objection that a fresh claim could not be entertained by the Assessing Officer otherwise than through a revised return.
- Basappa Balarama and Murthy Rangappa Vs. ITO, Ward-1, Karnataka, ITA Nos.1342 and 1427/Bang/2026, dated 29.05.2026 — followed on condonation of delays in appeals involving BSNL employees.
- Shri Sekar Gnanaprakasam Vs. DCIT, ITA Nos.1608 & 1609/CHNY/2026, dated 21.05.2026 — relied upon concerning exemption of BSNL VRS-2019 compensation under Section 10(10B).
- Harish Kumar Vs. ITO — relied upon for the view that ex-gratia compensation received under BSNL VRS-2019 is eligible for exemption under Section 10(10B).
- Sri Vissamsetty Ramakrishna Vs. The PCIT-4 and two others, W.P.No.19498 of 2026, order dated 15.07.2026 — considered concerning permission to file revised returns for claiming exemption under Section 10(10B) and the consequential remand for consideration on merits.
- National Thermal Power Corporation Ltd. v. CIT, (1998) 229 ITR 383 (SC) — followed for admission of the additional legal ground before the Tribunal.
- Sanchar Nigam Pensioners Welfare Association v. Union of India, Writ Petition No.16360 of 2023, dated 06.02.2026 — considered concerning exemption under Section 10(10AA)(i) towards leave salary for BSNL employees.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
The captioned appeals filed by different assessees are directed against separate, but identical, orders passed by the respective learned Commissioner/ Addl./Joint Commissioner of Income Tax (Appeals), relating to the respective assessment years, as mentioned hereinabove in the cause title. Since common issues are involved in all these 26 appeals, the appeals were heard together and are being disposed of, by this single consolidated order for the sake of convenience and brevity.
2. At the outset, it is noticed from the appeal record that there is a delay of 65 days in filing the appeals in ITA No. 859/VIZ/2026 and delay of 117 days in ITA No.830/VIZ/2026, before the Tribunal. The Ld. AR of the assessees, drew our attention to the affidavit filed by the assessee along with a petition seeking for condonation of delay. On perusal of the contents of the affidavit filed by the assessee, as well as, the submission of the Ld. AR, we find that the assessee s are prevented by a reasonable and sufficient cause in filing the appeal beyond the prescribed time limit with delay. Therefore, we hereby condone the delay in filing the appeal before the Tribunal and proceed to adjudicate the appeals on merits in the following paragraphs.
3. 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 t he administrative control of the Department of Telecommunications, Government of India. Pursuant to the decision of the Union Cabinet for revival of BSNL by reducing employee cost, administrative allotment of spectrum for 4G services, etc., BSNL introduced the Voluntary Retirement Scheme – 2019 for its employees aged 50 years and above, on payment of retirement ex- gratia. The assessees in the present appeals opted for the Voluntary Retirement Scheme – 2019 and received compensation/ex-gratia, as quantified by BSNL and paid in the relevant financial years. The BSNL paid the compensation after deducting applicable TDS as per law. The amount so received by the assessees was offered to tax in the respective returns of income filed for the relevant assessment yea rs. 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.
4. The assessees in the present appeals preferred appeals before the respective learned Commissioner/Addl./JCIT(A), inter alia, making a fresh claim for exemption under section 10(10B) of the Income- tax Act, 1961, in respect of the compensation received from Bharat Sanchar Nigam Limited (BSNL) under the Voluntary Retirement Scheme – 2019. The assessees contended that, due to ignorance of law and/or incorrect professional advice, they did not claim the benefit of exemption under section 10(10B) of the Act while filing their respective returns of income. Subsequently, upon becoming aware of judicial precedents rendered in favour of similarly placed BSNL employees holding that the compensation received under the BSNL Voluntary Retirement Scheme – 2019 is eligible for exemption under section 10(10B) of the Act, the assessees sought appropriate relief by preferring appeals before the respective learned Commissioner/ Addl./JCIT(A) and, wherever required, also filed petitions seeking condonation of delay for admission of their appeals and the fresh claim for exemption under section 10(10B) of the Act.
5. The respective learned Addl./J CIT(A), after considering the facts of the individual cases, dismissed the appeals. In the present bunch of appeals, involving delays ranging from 1000 days to 2000 days, in some cases, the learned Addl./JCIT(A) held that the assessees had failed to establish “sufficient cause” for condonation of the inordinate delay in filing the appeals and, accordingly, declined to condone the delay and dismissed the appeals as barred by limitation. In some of these cases, the appeals were also held to be inadmissible o r dismissed in limine. In certain cases, the learned Addl./JCIT(A) held that the fresh claim made by the assessees for exemption under section 10(10B) of the Act could not be entertained otherwise than by filing a revised return of income in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT and further observed that the issue involved was one of maintainability and limitation and not merely the allowability of exemption on merits. In one case, the learned Addl./JCIT(A) held that the appeal, being time- fresh claim not maintainable at the appellate stage, was devoid of merit. In another case, apart from holding that the assessee had failed to establish sufficient cause for condonation of delay, the learned Addl./JCIT(A) also dismissed the appeal as not maintainable in terms of section 246(1) of the Act. In the remaining cases, the learned Addl./JCIT(A), after examining the claim on merits, distinguished the decisions relied upon by the assessees relating to HPFMCL and HMT Tractor Division and held that the BSNL Voluntary Retirement Scheme – 2019 is a genuine voluntary retirement scheme governed by section 10(10C) of the Act and not retrenchment compensation covered under section 10(10B) of the Act. Accordingly, the orders passed by the A.O./CPC were upheld and the appeals were dismissed.
6. Aggrieved by the orders of the respective learned Addl/JCIT, the assessees are now in appeals before the Tribunal.
7. The learned counsel for the assessees, Shri Sayyad Sadak, CA, Shri Achyuth M, & Shri I. Kamasastry, CA, referring to the appeals filed by the assessees and the consequent orders passed by the respective learned Addl./JCIT(A), submitted that the respective learned Addl./JCIT(A) dismissed the appeals either on the ground of delay in filing the appeals or on the ground that the fresh claim made by the assessees was not maintainable at the appellate stage. He submitted that, wherever applicable, the delay in filing the appeals before the respective learned for condonation of delay. According to the learned counsel for the assessees, the assessees filed the appeals belatedly on account of the subsequent judicial precedents rendered in favour of similarly placed BSNL employees on the issue of exemption of compensation received under the BSNL Voluntary Retirement Scheme – 2019 and, due to incorrect professional advice and/or ignorance of law, could not prefer the appeals within the prescribed period. He submit ted that similar explanations have been accepted by various Benches of the Tribunal, including the decision of the ITAT, Bangalore Bench in the case of Basappa Balarama and Murthy Rangappa Vs. ITO, Ward- 1, Karnataka in ITA Nos.1342 and 1427/Bang/2026, date d 29.05.2026, wherein, in paragraphs 14 and 15, the Tribunal considered the issue of delay and condoned the delay in filing the appeals, ranging from about 900 to 2000 days, depending upon the explanation offered by the assessees. Accordingly, he submitted that the delay in filing the appeals before the respective learned Addl./JCIT(A), wherever applicable, deserves to be condoned in the interest of justice.
8. 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 Benches of the 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 of the Act and, in view of the 2 2019 Scheme is akin to retrenchment compensation as contemplated u/s 10(10B) nd 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 liability in accordance with law. Therefore, he submitted that the fresh claim ma de 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 in accordance with law.
9. The learned Senior A.R. for the Revenue, Shri A.P. Babu, Sr.AR, on the other hand, supporting the orders of the respective learned Addl./JCIT(A), submitted that, wherever the appeals were filed belatedly, the reasons given by the assessees do not constitute “sufficient cause” for condonation of delay and, therefore, the delay in filing the appeals before the respective learned Addl./JCIT(A) should not be condoned.
10. The learned Senior A.R. for the Revenue further submitted that, compensation received by the present assessees from BSNL under the VRS- 2019 Scheme is not retrenchment compensation for cl aiming exemption u/s 10(10B) of the Act because, as per the Scheme introduced by BSNL itself, it is very clear decline the same and there was no compulsion on the assessees to opt for VRS under any circumstances. Therefore, re- characterization of the VRS compensation received by the assessees as retrenchment compensation and allowing exemption @ 100% under section 10(10B) of the Act, is incorrect. The learned Senior A.R. further submitted that the assessees themselves had filed their respective returns of income and offered the compensation received from BSNL to tax in accordance with the returns filed by them. 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 falling under section 10(10C) of the Act and not under section 10(10B) of the Act and, therefore, the subsequent claim made by the assessees cannot be accepted. Therefore, he submitted that the appeals filed by the assessees should be dismissed.
11. 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 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.”
12. From the findings given by the Coordinate Bench of the ITAT, Bengaluru, we find that, in identical cases of BSNL employees, the delay has been condoned by the learned Addl./JCIT(A) himself in a number of cases, even though the delay ranged between 900 days and 2000 days. The Tribunal further noted that, in more than 144 cases, the Coordinate Benches of the Tribunal have condoned the delay in the cases of BSNL employees on identical facts and circumstances. Since the issue of condonation o f delay in the cases of BSNL employees has already been considered by various Benches of the Tribunal after examining the reasons given by the assessees 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 delays involved in the relevant appeals deserve to be condoned. Thus, we condone the delay in filing the appeals before the learned Addl./JCIT(A), wherever applicable.
13. 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 the relevant financial years. It is also an admitted fact that the assessees in the present cases had filed their respective returns of income and offered the compensation received from BSNL to tax and the same has been processed by the A.O./CPC in the intimations issued u/s 143 (1) of the Act. However, the assessees in the present cases have made a fresh claim of exemption towards the compensation received from BSNL under the Voluntary Retirement Scheme – 2019 u/s 10(10B) of the Act, for the first time before the respective learned Addl./JCIT(A). In some cases, the appeals were dismissed on the ground that the assessees had failed to establish sufficient cause for condonation of delay in filing the appeals. In certain other cases, the fresh claims made by the assessees were held t o be not maintainable at the appellate stage and, in one case, the appeal was also held to be not maintainable in terms of section 246(1) of the Act. In the remaining cases, the learned Addl./JCIT(A), after examining the issue on merits, rejected the claim of exemption u/s 10(10B) of the Act by holding that the compensation received by the assessees is governed by the provisions of section 10(10C) of the Act.
14. The learned counsel for the assessees have cited a plethora of judicial precedents, including the decisions of various Benches of the Tribunals and we 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 asses sees and directed the A.O. to give effect to the claim in accordance with law.
15. 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 formula ted 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.”
16. We further note that, the Hon’ble High Court for the State of Telangana in the case of Sri Vissamsetty Ramakrishna Vs. The PCIT-4 and two others in W.P.No.19498 of 2026, vide order dated 15.07.2026 has considered an identical issue of claim of exemption under Section 10(10B) of the Act, in light of challenging the order passed by the Pr.CIT-4 under Section 119(2)(b) of the Income- tax Act, 1961 rejecting the application filed by the assessee seeking permission to file revised returns of income for making a claim under Section 10(10B) of the Act, and while allowing the Writ Petition filed by the assessee, quashed the impugned order and remitted the matter to respondent No.1 with a direction to permit the petitioner to file/submit revised returns of income for claiming exemption u/s 10(10B) of the Act, and thereafter con sider the claim on merits. The relevant findings of the Hon’ble High Court are as under:
“6. When we look into the averments made in respect of identical claims being allowed by the Benches of Income Tax Appellate Tribunal at Chandigarh, Ahmedabad, Pune, Mumbai, Indore and Bangalore, in identically placed BSNL retirees, this Court is of the considered view that when similar fact was brought to the notice of the respondent- Department, the respondents ought to have appreciated the bona fides of the petitioner and the application filed by the petitioner under Section 119(2)(b) of the Act seeking condonation of delay to file revised ITRs for the Assessment Years 2020-21 and 2021-22, ought to have been considered by the respondent -Department with a more pragmatic and liberal approach, by appreciating the genuine hardship that the petitioner had been put to or would be put to, in case if the application seeking for condonation is not allowed.
7. A plain reading of the impugned order does not disclose whether respondent No.1 had considered and appreciated the orders passed by Benches of Income Tax Appellate Tribunal at Chandigarh, Ahmedabad, Pune, Mumbai, Indore and Bangalore, in identically placed BSNL retirees, and also by other Commissioner of Income Tax (Appeals) in its proper perspective, more particularly, when those orders have not been challenged any further and they have attained finality.
8. To make things worse for the respondent- Department, learned counsel for the petitioner has produced before the Court another order passed by the Income Tax Appellate Tribunal, Hyderabad ‘SMC’ Bench, at Hyderabad, dated 03.07.2026, wherein in a batch of appeals the lead matter being I.T.A.Nos.903 and 904/HYD/2026, wherein similar view had been reiterated by the Bench. In t he said judgment, it appears that similar view has also been followed earlier by the Income Tax Appellate Tribunal, Chennai Bench in the case of Shri Sekar Gnanaprakasam vs. DCIT¹ and also by the Income Tax Appellate Tribunal, Bengaluru Bench in the case of Basappa Balarama and Murthy Rangappa vs. Income Tax Officer, Ward 12, wherein the Coordinate Benches across the country have granted relief and condoned the delay.
9. For all the aforesaid said reasons and also taking into consideration the consistent vi ew taken by various Benches of the Tribunal across the country, we are inclined to allow the instant writ petition. The impugned order passed by respondent No.1 under Section 119(2)(b) of the Income Tax Act, 1961 bearing DIN and Letter No.ITBA/COM/F/17/2026- 27/1089643736(1), dated 12.06.2026, for the Assessment Years 2020-21 and 2021- 22, stands quashed and set aside. The matter stands remitted to respondent No.1. The petitioner herein is permitted to file / submit revised Income Tax returns. Thereafter, the respondent No.1 is directed to consider the case of petitioner on merits.”
17. 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 refer red to hereinabove and also keeping in view of the observations made by the Hon’ble High Court for the State of Telangana referred to hereinabove, we are of the considered view that, the 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 the light of our findings given hereinabove and allow the exemption claimed by the assessees under section Act, in accordance with law, and determine the tax payable/refundable, if any, by the respective assessees, in accordance with law.
18. Coming back to the additional grounds filed by the few assessee’ s making a fresh claim of exemption towards leave encashment under section 10(10AA)(i) of the Act. Ld. Counsel for the assessee, Shri Sayyad Sadak, Shri Achyuth M & Shri I. Kamasastry, CA, has argued the issue and claimed that the additional grounds filed by the assessee is a legal issue which can be taken at any time of the proceedings, including the pending proceedings before the Tribunal, therefore in view of the decision of Hon’ble Supreme Court of National Thermal Power Corporation Ltd. v. CIT (1998) 229 ITR 383 (SC), the additional ground filed by the assessees should be admitted.
19. The learned Senior AR for the Revenue, Shri A.P. Babu, Sr.AR, on the other hand strongly opposed the petition filed by the assessee and submitted that the petition filed by the assessee, at this stage, should not be admitted because the facts with regard to whether the claim of the assessee under section 10(10AA)(i) of the Act is in accordance with provisions of law, or not, cannot be verified unless the basic details as to the employees is available and therefore the additional ground filed by the assessee should not be admitted.
20. Having considered relevant petitions filed by the assessee, and arguments of the both sides, we find that assessees have taken a ground for exemption towards leave salary under section 10(10AA)(i) of the Act and claimed that such claim was not made due to bonafide mistake but not on account of deliberate intention and further the issue now stand covered by the decision of the Hon’ble Kerala High Court in the case of Sanchar Nigam Pensioners Welfare Association v. Union of India (February 2026) in Writ Petition No.16360 of 2023 dated 06.02.2026 and considering the fact that the additional ground filed by the assessee is a legal issue which can be taken at any time of the proceedings, by following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. v. CIT (supra), we admit the additional ground filed by the assessee.
21. Coming back to the issues on merits, w e have heard Learned Counsel for the assessee and Learned Senior AR for the Revenue, on the issue of exemption towards leave salary under section 10(10AA)(i) of the Act, in light of the decision of the Hon’ble Kerala High Court and the Hon’ble Kerala High Court has considered the very same issue of e xemption towards leave salary under section 10(10AA)(i) by the employees of BSNL and after considering relevant Central Civil Services (Pension) Rules, 1972 and the Voluntary Retirement Scheme of the BSNL held that the employees of BSNL are entitled for ex emption under section 10(10AA)(i) of the Act towards leave salary. In the present case, assessees have raised fresh claim for exemption under section 10(10AA)(i) of the Act. However, facts with regard to the conditions for claiming such exemptions are not readily available before us for verification and further these assessees have made a fresh claim for the first time before the Tribunal. Therefore, in our considered view, the issue need to be set-aside to the file of the Ld.AO for consideration. Thus, the ground relating to claim of exemption under section 10(10AA)(i) towards leave salary has been set- aside to the file of Ld.AO and the Ld.AO is directed to verify the claim of the assessee in light of the provisions of section 10(10AA)(i) of the Act and the conditions provided therein for making the claim for exemption in light of the facts of the present cases of the assessee’ s and also decide the issue by considering the decision of the Hon’ble Kerala High Court in the case of Sanchar Nigam Pensioners Welfare Association v. Union of India (supra).
22. In the result, all the appeals filed by the assessees are allowed for statistical purposes.
Order pronounced in the open court on 21th August, 2026.
