Nehaben Vimalkumar Shah Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, allowed two appeals filed by the assessee for AYs 2020-21 and 2021-22 against orders dated 18.02.2026 passed by the CIT(A). The assessee, an employee of Bharat Sanchar Nigam Limited (BSNL), had opted for the BSNL Voluntary Retirement Scheme (VRS)-2019, receiving VRS compensation of ₹18,46,414 and leave encashment of ₹13,96,370 in AY 2020-21. In the return of income, the assessee initially offered these amounts to tax while claiming partial exemption and later sought full exemption under Sections 10(10B) and 10(10AA). The CPC did not grant the enhanced claim, and the CIT(A) rejected the appeal, holding that Section 10(10B) applied only to a “workman” or compensation covered by the statutory conditions, observing that the assessee was an Assistant General Manager performing managerial functions.
Before the Tribunal, the assessee submitted that the compensation was received under the Government-approved BSNL VRS-2019 as part of the BSNL revival package and relied on earlier Tribunal decisions granting exemption under Section 10(10B). The Revenue supported the orders of the lower authorities and contended that the assessee was not a “workman” and was therefore not eligible for the exemption.
The Tribunal observed that it was undisputed that the compensation had been received under BSNL VRS-2019 and found that the facts were identical to those considered in its earlier decision in Jayeshkumar Tulsidas Sutaria v. ITO. Following that decision, it held that the assessee was entitled to claim exemption under Section 10(10B) in respect of the BSNL VRS-2019 compensation, subject to verification of the eligibility conditions. It further held that the compensation of ₹18,46,414 could not be brought to tax and that the assessee would be entitled to the consequential refund of tax deducted or paid thereon.
