Lata Muralidhar Joshi Vs ITO (ITAT, Bangalore Bench)
Wrong Section Is Not a Life Sentence: BSNL VRS Compensation Exempt U/s 10(10B)—Delayed Appeals & Fresh Claims Allowed
Summary: The appeals were filed by five former employees of Bharat Sanchar Nigam Ltd. (BSNL) who had retired under the BSNL Voluntary Retirement Scheme, 2019. Since the facts & legal controversy were common, the Bangalore ITAT disposed of all the appeals through a consolidated order.
The Scheme was introduced as part of BSNL’s restructuring exercise to reduce costs arising from persistent losses. The employees were around 50 years of age & were stated to be unfamiliar with the new technologies being adopted by BSNL.
Though labelled a Voluntary Retirement Scheme, the assessees contended that, in substance, it was a retrenchment exercise intended to reduce the workforce.
Compensation Paid in Four Instalments
Under the Scheme, employees received ex gratia/compensation in four equal instalments. The first instalment was paid during FY 2019-20 relevant to AY 2020-21, while the remaining three instalments were paid during FY 2020-21 relevant to AY 2021-22.
BSNL deducted tax at source from the compensation. Because of such TDS, the employees believed that the amount was taxable. Some assessees claimed the limited exemption of ₹5 lakh u/s 10(10C) & offered the balance to tax. Others, for want of proper legal advice, did not claim any exemption.
