RAJU VISHNUBHAI TARWANI,AHMEDABAD vs. INCOME TAX OFFICER, WARD 7(2)(1), AHMEDABAD

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ITA 958/AHD/2026Status: DisposedITAT Ahmedabad30 July 2026AY 2021-226 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to exemption under Section 10(10B) for the compensation received under the BSNL VRS scheme. The Assessing Officer was directed to grant the relief.

What were the facts?

The assessee received compensation under a BSNL VRS scheme and offered it to tax due to lack of awareness about exemption under Section 10(10B). The assessee later claimed exemption before the CIT(A) based on a favorable ITAT judgment.

What were the issues?

Whether compensation received under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 10(10B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Suchit Patel, AR
Hearing: 29/07/2026

Per Sanjay Garg, Judicial Member:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Delhi (hereinafter referred to as “CIT(A)”), dated 18.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter

ITA No.958/Ahd/2026[Raju Vishnubhai Tarwani vs. ITO] A.Y. 2021-22 - 2 –

referred to as the “Act”) and relates to Assessment Year (A.Y.) 2021-22.

2.

The assessee has taken following grounds in this appeal:

“1. The Learned CIT(A) erred in fact and in law in denying exemption under Section 10(10B) in respect of compensation received of Rs.11,18,064 under BSNL VRS 2019 SCHEME on invalid ground that the appellant is not a “workman” under Section 2(s) of the Industrial Disputes Act, 1947. 2. The Learned CIT(A) failed to properly interpret the Second Proviso to Section 10(10B), though the scheme was a Union Cabinet-approved Revival Plan funded through Central Government budgetary support. 3. appellant prays for appropriate relief on the above grounds of appeal. 4. appellant craves leave to add, alter, amend, substitute or withdraw any of the Grounds of Appeal stated hereinabove.”

3.

The assessee was 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 was exempt from tax. It is further submitted that the VRS was meant for the retrenchment of senior/old-age employees who were unable to adapt to new technology. Accordingly, the assessee contended that the entire amount of Rs.16,27,458/- received under the scheme was fully exempt from tax under the relevant provisions. The compensation amount received under the scheme was offered to tax in the return of income due to lack of awareness regarding the exemption

ITA No.958/Ahd/2026[Raju Vishnubhai Tarwani vs. ITO] A.Y. 2021-22 - 3 – available under section 10(10B) of the Income-tax Act, 1961. The employer had also deducted tax at source on the said amount. No exemption was claimed in the original or revised return of income. The CPC, Bengaluru issued an intimation under section 143(1) for the said year without granting any exemption, and no rectification or appeal was initiated at that time. It was only upon learning about the recent judgment of the Hon’ble ITAT Chandigarh Bench in the case of Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025, dated 30.05.2025) that the assessee became aware that the compensation received under the BSNL VRS-2019 scheme is eligible for exemption under section 10(10B), subject to compliance with Rule 2BA. The assessee, therefore, preferred appeal before the CIT(A) against the order of CPC and made the claim of exemption u/s 10(10B) for the first time. However, the Ld.CIT(A) dismissed the appeal of the assessee being barred by limitation and also refused to entertain new claim made for the first time before him.

4.

Aggrieved by the order of the Ld.CIT(A), the assessee is in further appeal before us.

5.

The Ld. Counsel for the assessee submitted that the amount received by the assessee represented 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,

ITA No.958/Ahd/2026[Raju Vishnubhai Tarwani vs. ITO] A.Y. 2021-22 - 4 –

1961, and, therefore, the assessee is entitled to full tax exemption. The Ld. Counsel for the assessee further relied upon the following decisions of Coordinate Benches of the ITAT in support of the claim of exemption.

“1. 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 3. ITA No.2389 & 2390/Ahd/2014 in the case of Suman Nandlal Raval dated 18.02.2026

6.

We note that the issue under consideration is squarely covered by the above referred decisions of the Co-ordinate benches of this Tribunal. The 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, has held as under:

“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 by observing as follows: "... The Appellant was employed with Bharat Sanchar Nigam Limited (BSNL), a Government of India enterprise. BSNL had notified the Voluntary Retirement Scheme (VRS) 2019 on 04.11.2019, which was duly approved and implemented by the employer. The Appellant opted for this scheme and accordingly received compensation under the VRS, as per the terms laid out by BSNL. The compensation amount received under the scheme was offered to tax by the appellant in the return of income due to lack of awareness about the availability of exemption under Section 10(108) of the Income Tax Act. 1961. The employer had also deducted TDS on the said amount. No exemption was

ITA No.958/Ahd/2026[Raju Vishnubhai Tarwani vs. ITO] A.Y. 2021-22 - 5 –

claimed in the original or revised return for the year by the appellant. The CPC, Bengaluru issued an intimation u/s 143(1) for the said year without granting any exemption, and no rectification or appeal was initiated at that time. The issue on this appeal pertains to exemption u/s 10(10B) of the Income Tax Act The appellant in his written submission has stated that it was only upon learning about the recent judgment of the Hon'ble ITAT Chandigarh, in the case of Harish Kumar vs. ITO Ward 5(5), Chandigarh (ITA No. 42/CHD/2025, dated 30.05.2025), that the Appellant came to know that the compensation received under the BSNL VRS 2019 scheme is eligible for full exemption u/s. 10(10B), subject to Rule 2BA compliance. The grievance raised in the grounds of appeal does not emanate from the order appealed against. It is not a case where the appellant claimed exemption u/s.10(10B) and it was denied by the Assessing Officer. The appellant having omitted to claim relief in the return of income can claim the relief by filing the revised return. In cases where the time limit for filing the revised return has expired, the appellant may seek condonation of delay from the jurisdiction PCIT and then proceed with filing the revised return. The issue raised in grounds of appeal does not emanate from the order of intimation u/s.143(1), Hence, the appeal is dismissed..." 5. Aggrieved by the orders of the Ld.CIT(A, the assessee is in further appeal before us. 6. 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. 7. In the result, both the appeals of the assessee are allowed.”

ITA No.958/Ahd/2026[Raju Vishnubhai Tarwani vs. ITO] A.Y. 2021-22 - 6 –

7.

Since, there is no change in the legal proposition and the factual matrix of the case, respectfully following the decision of the Co-ordinate Bench, the issue raised by the assessee in the present appeal is decided in favour of the assessee. It is held that the assessee is entitled to exemption u/s 10(10B) of the Act upon entire amount of retrenchment compensation (though named as VRS Compensation) and leave encashment, if any. The AO is directed to accordingly give the relief to the assessee.

8.

In the result, the appeal preferred by the assessee is allowed.

This Order pronounced on 30/07/2026

Sd/- Sd/- (NARENDRA PRASAD SINHA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 30/07/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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