Shanmugasundar Vs ITO (ITAT Chennai)
BSNL VRS Ex-Gratia Claimed After Filing Return: Chennai ITAT Says Appellate Authority Can Entertain the Claim
An employee disclosed ₹38,23,242 received under BSNL’s VRS-2019 scheme in his return and paid tax on it. Later, relying on a Tribunal decision concerning the same scheme, he sought exemption under section 10(10B) through a rectification petition. The CPC refused the claim, and the first appellate authority rejected it as a fresh claim not made in the return.
The Chennai Tribunal disagreed with the appellate authority’s approach. It held that the restriction discussed in Goetze (India) Ltd. v. CIT applies to the Assessing Officer’s power to entertain a fresh claim outside a revised return; it does not prevent an appellate authority from considering that claim. Following an earlier Chennai Bench decision on BSNL VRS-2019, the Tribunal directed the AO to allow the assessee’s claim.
The claim arose after the return was filed
For AY 2021–22, Shanmugasundar filed a return declaring total income of ₹44,40,070. That figure included ₹38,23,242 of ex-gratia compensation received from BSNL under its Government-approved VRS-2019 scheme. The return was processed under section 143(1).
The assessee subsequently came across a coordinate Bench decision holding that compensation under the scheme was eligible for exemption under section 10(10B). He filed a petition under section 154, seeking correction of the tax treatment of the amount already disclosed. The CPC did not grant the exemption in its rectification order.
