ITAT Allows Full Exemption as HMT VRS Compensation Was Linked to Closure of Undertaking

Suresh Pal Chauhan Vs ITO (ITAT Chandigarh) The appeals before the ITAT Chandigarh involved employees of HMT Ltd., Tractor Division, Pinjore, who received compensation under a Voluntary Retirement Scheme (VRS/VSS) introduced following the Government of India’s decision to close the loss-making Tractor Division. The assessees had claimed that the compensation received on closure of the undertaking was exempt under Section 10(10B) of the Income Tax Act, whereas the Revenue treated it as eligible only for the limited exemption available under Section 10(10C). The Tribunal examined the Governmen...