Prathibha Jgadish Unawane Vs ITO (ITAT Pune)
Delay in Filing Appeal Condoned Because Substantial Justice Prevails Over Procedural Technicalities; ITAT Grants Relief to BSNL Employees Because VRS Compensation Was Found to Be a Capital Receipt; BSNL Employees Can Claim Section 10(10B) Exemption Because Compensation Was Linked to Forced Workforce Reduction
In a batch of appeals relating to Assessment Years 2020-21 and 2021-22, the Income Tax Appellate Tribunal (ITAT), Pune, considered a common issue concerning the taxability of amounts received by employees of Bharat Sanchar Nigam Limited (BSNL) under the BSNL Voluntary Retirement Scheme (VRS), 2019.
The assessees were employees of BSNL, a company under the administrative control of the Department of Telecommunications. As part of a revival package approved by the Union Cabinet on 23.10.2019 and communicated through an Office Memorandum dated 29.10.2019, BSNL introduced the BSNL VRS-2019 for employees aged 50 years and above. Under the scheme, employees who retired received ex-gratia compensation. The assessees had originally offered the compensation to tax after claiming exemption of ₹5 lakh under Section 10(10C) and paid tax on the remaining amount wherever applicable.
Subsequently, for the first time before the Commissioner of Income Tax (Appeals), the assessees contended that the entire compensation received under the scheme was exempt under Section 10(10B) of the Income-tax Act as retrenchment compensation and constituted a capital receipt not liable to tax. In some cases, the appeals were dismissed due to delay, while in others the new claim was not entertained on the ground that it had not been made through a revised return. The assessees challenged these findings before the Tribunal.
