Renuka Narasimha Prabhu Vs ITO (ITAT Bangalore)
BSNL VRS Compensation Fully Exempt U/s 10(10B); ITAT Also Allows Full Leave Encashment Relief to Former DOT/BSNL Employees
In a major relief for former BSNL employees who opted under the BSNL VRS Scheme, 2019, the Bangalore ITAT held that the compensation received under the scheme qualifies as retrenchment compensation exempt under Section 10(10B) and not merely as voluntary retirement compensation restricted to ₹5 lakh under Section 10(10C). The Tribunal directed the Assessing Officers to grant full exemption of the retrenchment compensation received by all the assessees before it.
The Tribunal noted that the assessees were originally employees of the Department of Telecommunications (DoT) who were subsequently transferred to BSNL and were separated from service pursuant to the Government-approved BSNL Revival and Restructuring Package, 2019. Relying on a series of decisions from various ITAT Benches, including the Chandigarh, Ahmedabad, Indore, Mumbai and Pune Benches, the Tribunal held that the BSNL VRS Scheme was in substance a retrenchment scheme, entitling employees to exemption under Section 10(10B). It also rejected the Revenue’s contention that the employees were not “workmen” and therefore not entitled to the exemption.
A further important issue concerned leave encashment. In the case of certain assessees, exemption had been restricted to ₹3 lakh. The Tribunal relied on the decision of the Kerala High Court in Sanchar Nigam Pensioners Welfare Association, which held that BSNL VRS retirees are entitled to leave encashment tax benefits available to Central Government employees. Following the decisions of the Jaipur and Indore Benches, the Tribunal directed grant of full exemption of leave encashment, including application of the enhanced exemption limit where applicable.
The Tribunal also took note that several similarly placed BSNL employees had obtained condonation of substantial delays in filing appeals and held that the principle of parity required similar treatment. Accordingly, delays that had led to dismissal of certain appeals were effectively overcome and relief was granted on merits.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
