Saguirodin Amid Aga Vs ITO (ITAT Panaji)
BSNL VRS-2019 Compensation Is Retrenchment Compensation Exempt under Section 10(10B): Panaji ITAT
The assessees, former BSNL employees, received ex gratia compensation upon retirement under the BSNL Voluntary Retirement Scheme, 2019. The dispute was whether the compensation was merely voluntary-retirement payment eligible for the limited exemption under section 10(10C) or retrenchment compensation fully exempt under section 10(10B).
The Revenue argued that BSNL continued as a going concern under a revival plan and that the employees had voluntarily opted for retirement. It contended that voluntary retirement is specifically excluded from “retrenchment” under the Industrial Disputes Act and that the exemption should therefore be restricted to section 10(10C).
The ITAT, however, followed the consistent decisions of the Pune, Ahmedabad and Chandigarh Benches. It held that the BSNL scheme was introduced as part of a Government-approved restructuring plan to reduce the workforce and, in substance, constituted a forced retirement or retrenchment arrangement, notwithstanding its description as a voluntary retirement scheme.
The Tribunal emphasised that the substance of the arrangement must prevail over its nomenclature. The compensation was therefore held to be a capital receipt in the nature of retrenchment compensation, falling under section 10(10B), and not merely a payment covered by section 10(10C).
Accordingly, the CIT(A)’s findings were reversed. The assessees were directed to submit revised computations claiming exemption under section 10(10B), after which the jurisdictional AOs must recompute the tax liability and grant the consequential refunds following verification.
List of Cases Discussed / Relied Upon
- Prathibha Jagdish Unawane Vs. ITO – ITA No.1117/PUN/2026 and others, order dated 29.04.2026
- Jayesh Kumar Tulsidas Sutaria Vs. ITO (2026) 183 taxmann.com 587 (Ahmedabad-Trib.)
- Rajendra Himmatrao Patil vs. ITO – ITA Nos. 302/PUN/2026
- Meghmala Sudhir Pathak vs. ITO – ITA Nos. 290/PUN/2026
- Shraddha Pralhad Arote vs. ITO – ITA Nos. 262/PUN/2026
- Harish Kumar Vs. ITO (2025) 175 taxmann.com 379 (Chandigarh-Trib.)
- Dayal Singh Vs. ITO – ITA 519/CHD/2024
- Suresh Pal Chauhan vs. ITO (2023) 154 taxmann.com 529 (Chandigarh-Trib.)
- Hindustan Photo Film Workers Welfare Centre Vs. Govt. of India (2017) 79 taxmann.com 298 (Madras)
- CIT (TDS) Vs. Hindustan Photo Film Workers Welfare Centre (2021) 129 taxmann.com 356 (Madras)
- Union of India Vs. M/s. Hindustan Photo Film Workers Welfare Centre and others – Special Leave Petition (Civil) Diary No.37247/2017
- Shree Rajeshwar Sharma Vs. ITO – ITA No.870/CHD/2018
- CIT Vs. Mahalakshmi Textile Mills Ltd. (1967) 66 ITR 710 (SC)
- PCIT Vs. Karnataka State Cooperative Federation Ltd. (2021) 128 taxmann.com 1 (Karnataka)
- Vijay Vishin Meghani vs DCIT [2017] 398 ITR 250 (Bombay)
- Vishnu Mohan T Nair v. Income Tax Officer, [2018] 61 ITR(T) 796 (Ahmedabad-Trib.)
- CIT Vs. Pruthvi Brokers & Shareholders (2012) 23 taxmann.com 23 (Bombay)
- Mahendra Singh Dhantwal v. Hindustan Motors Ltd. [1985] 20 Taxman 1/152 ITR 68
FULL TEXT OF THE ORDER OF ITAT PANAJI
The captioned 03 appeals at the instance of two different assessee(s) pertaining to A.Yrs. 2020-21 and 2021-22 are directed against the separate orders framed by Addl/JCIT(A) (ld. NFAC) passed u/s 250 of the Income Tax Act 1961.
