Mysore Ramaswamy Harish Vs ITO (ITAT Bangalore)
Bangalore ITAT allows retrenchment compensation claim despite earlier section 10(10C) claim and TDS by employer
An employee who offered part of his BSNL VRS compensation to tax after claiming ₹5 lakh exemption under section 10(10C) later sought exemption under section 10(10B). Could that claim be rejected because it was not made in the original or a revised return? The Bangalore ITAT answered in the employee’s favour in Mysore Ramaswamy Harish v. ITO, ITA No. 1833/Bang/2026, order dated 23 September 2026, for AY 2021–22. It held that the appellate authorities could examine the claim and allowed the assessee the benefit of section 10(10B).
How the claim arose
The assessee was a BSNL employee who opted to leave under the BSNL Voluntary Retirement Scheme, 2019. The order describes the scheme as a measure introduced while BSNL was restructuring and reducing workforce costs. Compensation was payable in four instalments: the first in FY 2019–20 and the remaining three in FY 2020–21, the year relevant to this appeal.
BSNL deducted tax at source on the payments. The assessee therefore proceeded on the understanding that the compensation was taxable, claimed exemption of ₹5 lakh under section 10(10C) and offered the balance in his return. The return was processed and accepted under section 143(1).
