Harish Kumar Vs ITO (ITAT Chandigarh)
The appeal was filed by the assessee against the order dated 20.12.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2021–22. The primary issue in dispute was whether the assessee was entitled to full exemption under section 10(10B) of the Income Tax Act on the compensation received under the BSNL Retirement Scheme 2019, or whether such exemption was restricted to ₹5,00,000 as held by the Assessing Officer.
The assessee, a former employee of the Department of Telecommunication Services and Department of Telecom Operations, became part of Bharat Sanchar Nigam Limited (BSNL) after its formation. He opted for the BSNL Retirement Scheme 2019 and received total emoluments amounting to ₹30,17,000. In his income tax return, the assessee claimed exemption for the entire amount under section 10(10B). However, the Assessing Officer restricted the exemption to ₹5,00,000 and added ₹25,17,000 to the taxable income, on the ground that the scheme was voluntary in nature and not a compulsory retrenchment, invoking the second proviso to section 10(10B). The CIT(A) upheld this view, leading to the present appeal.
Before the Tribunal, the assessee contended that although the scheme was termed as a Voluntary Retirement Scheme (VRS), it was, in substance, a retrenchment scheme. It was argued that BSNL had been incurring losses for several years, employees had not been paid salaries for months, and many employees, including the assessee, were above 50 years of age and not equipped with newer technologies. The VRS was introduced as part of a revival plan approved by the Government of India to reduce employee costs in BSNL and MTNL. Therefore, the scheme effectively forced employees to opt for retirement, making it akin to retrenchment rather than a voluntary exit.
