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.
