JAYENDRA BIPINCHANDRA PATEL,GANDHINAGAR vs. ITOWARD-7(2)(1), AHMEDABAD
Facts
The assessee, a salaried employee of BSNL, opted for a Voluntary Retirement Scheme (VRS) and received compensation. The assessee initially disclosed this amount and paid tax, but later contended that it should be exempt as retrenchment compensation under Section 10(10B) of the Income Tax Act, 1961. The lower authorities dismissed the assessee's claim.
Held
The Tribunal held that the compensation received under the BSNL VRS-2019 scheme should be treated as exempt under Section 10(10B) of the Income Tax Act, 1961. Relying on coordinate bench decisions, the Tribunal found the assessee eligible for full tax exemption on the received compensation.
Key Issues
Whether the compensation received under the Voluntary Retirement Scheme (VRS) by a BSNL employee qualifies for exemption as retrenchment compensation under Section 10(10B) of the Income Tax Act, 1961.
Sections Cited
10(10B), 10(10C), 143(3), 249(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
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The captioned two appeal have been filed at the instance of the Assessee against the separate orders both dated 30.11.2025 passed by Learned Addl/JCIT Commissioner of Income Tax (Appeal)- Faridabad, arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years 2020-21 & 2021-22. Since the issues raised in these two appeals are identical, we are extracting the ground of appeal raised in ITA No.189/Ahd/2026 for the purpose of adjudication. The decision rendered in the said appeal shall apply mutatis mutandis to the other appeal bearing ITA No. 190/Ahd/2026 for Assessment Year 2021-22. ITA Nos.189-190/Ahd/2026 (Assessment Years: 2020-21- 2021-22) - 2–
ITA No.189/Ahd/2026 for AY 2020-21
The assessee has raised the following grounds of appeal:
The order passed by lower authorities is bad in law and required to be quashed.
Ld. JCIT (A) ought to have retrenchment treated compensation received as tax exempt u/s 10(10B) of the Act.
Appellant prays that it is duty of AO to tax correct income and accordingly, AO ought to have granted deduction u/s 10(10B) of the Act instead of section 10(10C) of the Act.
The assessee is a salaried employee working with BSNL. The Government introduced a Voluntary Retirement Scheme (VRS), which the assessee opted for and was duly accepted by BSNL. It is submitted that the amount received under the scheme has been disclosed in the return of income, and due tax has been paid, despite the fact that the same is exempt from tax. It is further submitted that the VRS is meant for the retrenchment of senior/old-age employees who are unable to adapt to new technology. Accordingly, the assessee contended that the entire amount of Rs. 18,12,907/- for AY 2020-21 & Rs. 35,15,766/- for AY 2021-22 received under the scheme is fully exempt from tax under the relevant provisions.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who dismissed the ground of appeal of the assessee.
ITA Nos.189-190/Ahd/2026 (Assessment Years: 2020-21- 2021-22) - 3–
The Ld. Counsel for the assessee submitted that the amount received by the assessee represents retrenchment compensation received from the Central Government under a scheme approved by the Government. It was submitted that the said amount is fully exempt from tax under section 10(10B) of the Income-tax Act, 1961, and, therefore, the assessee is entitled to full tax exemption. The Ld. Counsel for the assessee further relied upon the decisions of Co- ordinate Benches of the ITAT in support of the claim of exemption.
ITA No. 42/Chd/2025 AY 2021-22 in the case of Harish Kumar V/s. ITO Chandigarh dated 30.05.2025. 2. ITA Nos.2387 & 2388/Ahd/2025 in the case Jayeshkumar Tulsidas Sutaria dated 17.02.2026
ITA No.2389 & 2390/Ahd/2014 in the case of Suman Nandlal Raval dated 18.02.2026
After careful consideration of the grounds of appeal, it is noted that the identical issue was considered by Co-ordinate Bench of this Tribunal in ITA Nos. 2387 & 2388/Ahd/2025 for AYs 2020-21 & 2021- 22 vide order dated 17.02.2026, wherein it was held as follows:
“…4. Aggrieved by the orders of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who dismissed the appeal of the assessee
“…In the present case, the delay in filing of the appeal is almost four years which is an inordinate and huge delay. Moreover, as has been elaborately discussed above, the appellant has also failed to provide any reasonable ground that could assist the first
ITA Nos.189-190/Ahd/2026 (Assessment Years: 2020-21- 2021-22) - 4–
appellate authority to draw sufficient cause for the inordinate delay of 1,396 days in filing of this appeal. The inordinate delay in the present case, if condoned, would make the term ‘’Sufficient cause” in section 249(3) of the Income Tax Act, 1961 hollow and meaningless.
In light of the facts of the case, provisions of the Income Tax Act, 1961 and judicial decisions in the matter as discussed above, I am constrained to conclude that the appellant has failed to submit any reasonable ground for condoning the inordinate delay of 1,396 days i.e almost four years in filing this appeal. Being bereft of any sufficient cause as envisaged in section 249(3) of the Act, the appeal cannot be admitted. Since the appeal is not maintainable, there is no need to adjudicate on the merits therein.
Aggrieved by the orders of the Ld.CIT(A, the assessee is in further appeal before us.
We have gone through the records and considering the merits of the case, we condoned the delay and proceed to adjudicate the issue.
The Ld. Counsel for the assessee submitted that due to lack of awareness of the legal provisions at the time of filing the return of income, the assessee inadvertently offered the compensation received under BSNL VRS-2019 to tax. Subsequently, based on the decision of the Hon’ble ITAT Chandigarh Bench in Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025 dated 30.05.2025), wherein compensation under the same BSNL VRS-2019 scheme was held to be exempt under section 10(10B), the assessee now seeks exemption of such compensation. We find that the assessee filed the claim before the Ld. CIT(A) and since the income of the assessee is not taxable, the assessee is eligible for the refund of the TDS.
In the result, both the appeals of the assessee are allowed…” Since there is no change in the legal proposition and the factual matrix of the case, respectfully following the decision of the Co-ordinate
ITA Nos.189-190/Ahd/2026 (Assessment Years: 2020-21- 2021-22) - 5–
Bench, the grounds raised by the assessee in the present appeal is hereby allowed.
In the result, the appeal filed by the assessee is allowed.
ITA No.190/Ahd/2026 for AY 2021-22
As regard to ITA No.190/Ahd/2026 for AY 2021-22 is identical to that of ITA No.189/Ahd/2026. Hence, the same is also allowed.
In the result, both the appeals of the assessee are allowed.
The order is pronounced in the open Court on 27.03.2026. /- () Ahmedabad; Dated 27 .03.2026 MV आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त(अपील) / The CIT(A)-
"वभागीय ""त"न"ध, आयकर अपील!य अ"धकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड' फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, True Cop सहायक पंजीकार (Dy./Asstt.
