Faridayasmin G Khatib Vs ITO (ITAT Bangalore)
BSNL VRS Compensation Eligible for Full Exemption Under Section 10(10B); Legitimate Relief Cannot Be Denied on Technical Grounds: Bangalore ITAT
The assessee, a former BSNL employee, received ex-gratia compensation under the BSNL Voluntary Retirement Scheme, 2019 in two instalments—₹14.17 lakh in FY 2019-20 and ₹31.10 lakh in FY 2020-21. Following Form 16 issued by BSNL, she offered the second instalment entirely to tax without claiming exemption. Upon learning of Tribunal decisions holding such compensation exempt under section 10(10B), she filed a rectification application under section 154. The AO and CIT(A) rejected the claim on the ground that it had not been made in the original return and was not a mistake apparent from the record.
The Bangalore ITAT observed that, in the assessee’s own case for the preceding assessment year, the Tribunal had already allowed exemption under section 10(10B) in respect of compensation arising from the same VRS. Several Tribunal benches had also consistently held that BSNL employees were entitled to this exemption.
The Tribunal reiterated that the restriction laid down by the Supreme Court in Goetze (India) Ltd. applies to the AO and does not curtail the powers of appellate authorities to entertain a legitimate claim. A lawful exemption could not be denied merely because the assessee had either omitted the claim or claimed relief under an incorrect provision in the original return. Accordingly, the CIT(A)’s order was set aside and the entire retrenchment compensation received under the BSNL VRS-2019 was held eligible for exemption under section 10(10B).
FULL TEXT OF THE ORDER OF ITAT BANGALORE
