Kalpana Varshesh Panchal Vs ITO (ITAT Ahmedabad)
Tax Deducted by Employer Does Not Decide Taxability: BSNL VRS Compensation Exempt u/s 10(10B) Despite Omission in Return
The Ahmedabad ITAT has held that compensation received under the Bharat Sanchar Nigam Limited Voluntary Retirement Scheme, 2019 was eligible for exemption u/s 10(10B), even though the employee had not claimed the entire exemption while filing the original returns. The Tribunal condoned the delay in filing the appeals, entertained the fresh claim and directed the AO to recompute the taxable income & grant the consequential refund.
The assessee, Kalpana Varshesh Panchal, was an individual who received compensation under BSNL VRS-2019 during AYs 2020-21 & 2021-22. At the time of filing her returns, she was unaware that the compensation was eligible for exemption u/s 10(10B). BSNL had also deducted tax at source from the payments. Consequently, the assessee proceeded on the assumption that the compensation was taxable and offered a substantial portion of it as income.
For AY 2020-21, the assessee received VRS compensation of ₹11,08,691. She claimed exemption of ₹5 lakh and offered the balance amount of ₹6,08,691 to tax. The return was processed through an intimation u/s 143(1) dated 06.05.2021.
Subsequently, the Chandigarh ITAT in Harish Kumar v. ITO – ITA No. 42/Chd/2025, order dated 30.05.2025, held that compensation received under the same BSNL VRS-2019 was exempt u/s 10(10B). On becoming aware of this legal position, the assessee filed appeals before the CIT(A) claiming exemption for the compensation previously offered to tax and sought a refund of the tax deducted and paid.
