NEERAJ DHAMIJA,NORTH WEST DELHI, NEW DELHI vs. INCOME TAX OFFICER WARD 68(1), DELHI, NEW DELHI

ITA 6474/DEL/2026Status: DisposedITAT Delhi28 September 2026AY 2020-2110 pages
AI SummaryAllowed

What were the facts?

The assessee, Neeraj Dhamija, filed appeals for Assessment Years 2020-21 and 2021-22 against orders passed by the Commissioner of Income Tax (Appeals). These orders were passed under Section 154 of the Income-tax Act, 1961. The assessee, a retired employee of Bharat Sanchar Nigam Ltd. (BSNL), had claimed an exemption of Rs. 11,27,706/- for AY 2020-21 and Rs. 24,75,190/- for AY 2021-22 under Section 10(10B) of the Act, on amounts received under the BSNL Voluntary Retirement Scheme (VRS), 2019. The lower authorities had rejected this claim. The assessee relied on a co-ordinate bench's decision in Prathibha Jagadish v. ITO.

What did the Tribunal hold?

The Tribunal held that the amount received by the assessee under the BSNL Voluntary Retirement Scheme, 2019, is in the nature of retrenchment compensation and falls under the provisions of Section 10(10B) of the Act, not Section 10(10C). Consequently, such compensation is in the nature of a capital receipt exempt from tax. The Tribunal followed the consistent view taken by co-ordinate benches of the ITAT, including the Pune, Ahmedabad, and Chandigarh benches, and specifically referred to the reasoning in Prathibha Jagadish v. ITO. The reasoning adopted was that the substance of the payment, rather than the nomenclature, matters, and the scheme represented a termination of employment with compensation, aligning with the intent of public welfare provisions. The impugned findings of the CIT(A) were set aside. The assessee was directed to place a revised computation of income before the Jurisdictional Assessing Officers claiming the exemption under Section 10(10B), after which the revenue authorities were to compute the tax liability and grant any refund due after verification. No issue was expressly left undecided.

What were the issues?

1. Whether the amount received by the assessee from BSNL under the Voluntary Retirement Scheme, 2019, qualifies as retrenchment compensation eligible for exemption under Section 10(10B) of the Income-tax Act, 1961, as a capital receipt not liable to tax? (Question of law) Assessee's contentions: The amount received under the BSNL VRS, 2019, is in the nature of retrenchment compensation and is a capital receipt exempt from tax under Section 10(10B). The assessee relied on various decisions of co-ordinate benches of the Tribunal, including Prathibha Jagadish v. ITO, Harish Kumar v. ITO, and Jayesh Kumar Tulsidas Sutaria v. ITO, which held similar claims in favour of the assessee. The assessee also noted that CIT(A)s have condoned delays and allowed similar appeals from BSNL employees without departmental appeals. Revenue's contentions: The amount received is under a Voluntary Retirement Scheme, and exemption is limited to Rs. 5.00 lakhs as per Section 10(10C). The lower authorities' orders were supported. The Revenue argued that recent Tribunal orders extending Section 10(10B) to the BSNL VRS, 2019, were based on an erroneous extension of logic and misapplication of the "Closure Doctrine" from the Hindustan Photo Film Workers' Welfare Centre case. The Revenue emphasized the distinction between a "Going Concern" in revival and an undertaking in liquidation, arguing that the scheme was for a reviving entity, not a dying one.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 10(10C),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI SANJAY AWASTHI

For Respondent: Shri Novel Roy, Sr. DR

Heard together (2 matters)

ITA 6474/DEL/2026
ITA 6475/DEL/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER:

These assessee’s twin appeals for assessment year 2020-21 & 2021-22, arise against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-1, Thiruvanantpuram’s orders dated 29.04.2026 having DIN and order no. ITBA/APL/S/250/2026-27/1088711710(1) & ITBA/APL/S/250/2026- 27/1088712020(1), involving proceedings under section 154 of the Income-tax Act, 1961 (hereina

The order continues below.

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