ASA RAM,KARNAL vs. INCOME TAX OFFICER, WARD-1, KARNAL

ITA 8065/DEL/2026Status: DisposedITAT Delhi25 September 2026AY 2021-2210 pages
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What were the facts?

The assessee, Asa Ram, is an appellant before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, for Assessment Year 2021-22. The appeal challenges the order dated 15.06.2026 passed by the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-5, Chennai, concerning proceedings under Section 154 of the Income-tax Act, 1961. Both lower authorities rejected the assessee's claim for exemption under Section 10(10B) of Rs. 6,99,478/-. This amount was received by the assessee, a retired employee of Bharat Sanchar Nigam Ltd. (BSNL), under the VRS Scheme, 2019. The assessee relies on a co-ordinate bench's order in Prathibha Jagadish v. ITO, which decided a similar issue in favour of the assessee.

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 a capital receipt exempt from tax. The Tribunal adopted the reasoning from the co-ordinate bench's decision in Prathibha Jagadish v. ITO and other relied-upon cases, emphasizing that the substance of the payment, rather than technical wording, matters. The Tribunal noted the consistent view taken by co-ordinate benches of the ITAT in favour of the assessee on identical facts. The impugned findings of the CIT(A) were set aside. The assessee is directed to place a revised computation of income before the Jurisdictional Assessing Officer claiming the exemption under Section 10(10B). The Revenue authorities are directed to compute the tax liability and grant any refund due after verification. The common issue raised in the grounds of appeal by the assessee stands allowed.

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 opposed to being taxable or eligible only for exemption under Section 10(10C). Assessee's Contentions: - The amount received under the BSNL VRS, 2019, is in the nature of retrenchment compensation and a capital receipt not liable to tax under Section 10(10B). - Relied on co-ordinate bench decisions in Prathibha Jagadish v. ITO, Harish Kumar v. ITO, Dayal Singh v. ITO, Suresh Pal Chauhan vs. ITO, and others, which held similar claims in favour of the assessee. - Argued that the claim for exemption under Section 10(10B) was made for the first time before the CIT(A) and was admitted by the Tribunal in previous cases. Revenue's Contentions: - The claim was not made in the regular return of income, and any such claim should have been made through a revised return. - The sum received from BSNL is under a Voluntary Retirement Scheme, for which exemption is limited to Rs. 5.00 lakh as provided under Section 10(10C). - Recent Tribunal orders extending Section 10(10B) logic to the BSNL VRS, 2019, are based on an erroneous extension of the "Closure Doctrine" from the Hindustan Photo Film Workers' Welfare Centre case. - Argued that the distinction between a "Going Concern" in revival and an undertaking in liquidation was not appreciated.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI SATBEER SINGH GODARA

PER SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER:

These assessee’s appeal for assessment year 2021-22, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-5, Chennai’s orders dated 15.06.2026 having DIN and order no. ITBA/APL/S/250/2026-27/1089714051(1), involving proceedings under section 154 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties. Case file perused.

2.

It emerges during the course of hearing that both the learned lowe

The order continues below.

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