SHANMUGASUNDAR,BANGALORE NORTH vs. INCOME TAX OFFICER, WARD-4, CUDDALORE

ITA 2960/CHNY/2026Status: DisposedITAT Chennai22 September 2026AY 2021-224 pages
AI SummaryAllowed

What were the facts?

The assessee, an individual, filed an income tax return for Assessment Year 2021-22 declaring a total income of Rs. 44,40,070/-. This included an ex-gratia amount of Rs. 38,23,242/- received from BSNL under its Government-approved VRS Scheme of 2019. The return was processed under Section 143(1). The assessee later filed a petition under Section 154 seeking exemption for this amount under Section 10(10B), citing a coordinate bench decision. The CPC rejected this, and the assessee appealed to the CIT(A). The CIT(A) rejected the appeal, deeming it a fresh claim that altered the return, relying on the Supreme Court decision in Goetze India Ltd. vs CIT. The assessee is now appealing this order to the ITAT.

What did the Tribunal hold?

The Tribunal held that the ex-gratia compensation received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B) of the Act. The Tribunal noted that a coordinate bench in Shri Sekar Gnanprakasam vs DCIT had considered an identical issue and held the amount to be exempt. The Tribunal also found that the BSNL VRS-2019 scheme was formulated pursuant to a Government-approved revival package and funded by Government budgetary support, and that it partakes the character of a Government-approved retrenchment compensation scheme. Regarding the second issue, the Tribunal held that the decision in Goetze India Ltd. (supra) is confined to the powers of the AO and does not restrict appellate authorities from entertaining a claim not made in the original return. The Tribunal found that the relevant facts were on record and the CIT(A) was incorrect in rejecting the claim on that ground. Consequently, the Tribunal directed the AO to allow the claim of the assessee and grant consequential relief.

What were the issues?

1. Whether the ex-gratia amount received by the assessee under the BSNL VRS-2019 scheme is eligible for exemption under Section 10(10B) of the Income Tax Act, 1961. The assessee contended that the scheme, though termed VRS, was effectively a retrenchment scheme due to BSNL's financial difficulties and funded by government budgetary support, thus partaking the character of a Government-approved retrenchment compensation scheme. The assessee relied on a coordinate bench decision in Shri Sekar Gnanprakasam vs DCIT and the Chandigarh Bench decision in Harish Kumar vs. ITO. The revenue did not present any contrary judicial precedent. 2. Whether the appellate authorities are restricted from entertaining a claim not made in the original return, given the CIT(A)'s reliance on Goetze India Ltd. vs CIT. The assessee argued that the Goetze India Ltd. decision pertains only to the AO's powers and does not restrict appellate authorities. The revenue did not present any argument on this point.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 143(1),Section 154,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

For Respondent: Ms. V. Supraja, Addl. CIT

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A), Thane (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 04.03.2026 for Assessment Year (AY) 2021-22. 2. The assessee is an individual and filed the return of income for AY 2021-22 on 29.11.2021 declaring total income of Rs.44,40,070/-. The assessee in the return

The order continues below.

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