USMANGANI AHEMADBHAI MANVA,MODASA vs. ITO, WARD-1, MODASA, MODASA

ITA 2526/AHD/2026Status: DisposedITAT Ahmedabad05 October 2026AY 2021-227 pages
AI SummaryAllowed

What were the facts?

The assessee, Usmangani Ahemadbhai Manva, filed appeals for Assessment Years (AY) 2020-21 and 2021-22 against the orders of the CIT(A). The assessee received compensation under the BSNL Voluntary Retirement Scheme (VRS) 2019. For AY 2020-21, the assessee also claimed exemption for leave encashment. The assessee initially did not claim full exemption under Section 10(10B) for VRS compensation due to lack of awareness and TDS by the employer. Upon learning of judicial precedents, the assessee approached the CIT(A) with additional claims. The CIT(A) directed the AO to verify eligibility for Section 10(10B) exemption based on whether the retirement was from the BSNL 2019 scheme and if the assessee was in the non-executive cadre. For leave encashment in AY 2020-21, the CIT(A) held that CBDT Notification No. 31/2023, enhancing the exemption limit, was prospective and inapplicable.

What did the Tribunal hold?

The Tribunal held that the issue of exemption under Section 10(10B) for BSNL VRS-2019 compensation is identical to issues decided in favour of the assessee by co-ordinate benches, including in Jayeshkumar Tulsidas Sutaria vs. ITO, Ward 7(2)(1), Ahmedabad (ITA Nos.2387 & 2388/AHD/2025) and other cited cases. The Tribunal found that mere executive status should not disqualify an employee from this exemption. Therefore, the issue of exemption under Section 10(10B) for both assessment years was decided in favour of the assessee. The Assessing Officer was directed to grant the exemption and refund due. For leave encashment exemption under Section 10(10AA) for AY 2020-21, the Tribunal, relying on the Kerala High Court's decision in Sanchar Nigam Pensioners’ Welfare Association vs. Union of India, directed the AO to grant the exemption after verifying that the assessee was a Department of Telecom (DoT) employee absorbed by BSNL and whose pension is governed under Rule 37A of the CSS (Pension) Rules. The alternative contention regarding CBDT Notification No. 31/2023 was not required to be considered in light of this direction. The assessee was directed to provide necessary details to the AO.

What were the issues?

1. Whether the assessee is entitled to full and unconditional exemption under Section 10(10B) of the Income Tax Act, 1961, in respect of compensation received under the BSNL Voluntary Retirement Scheme (VRS) 2019, despite the CIT(A)'s direction to verify cadre status. - Assessee's contention: The assessee argued that the issue is settled in favour of similarly situated BSNL employees by various ITAT benches, citing decisions from Ahmedabad, Chandigarh, and Pune Benches, and that beneficial provisions should be interpreted liberally, as per the Madras High Court in Hindustan Photo Films Workers Welfare Centre v. Government of India. - Revenue's contention: Not recorded in the judgment. 2. Whether the assessee is entitled to exemption under Section 10(10AA) of the Income Tax Act, 1961, for leave encashment, considering CBDT Notification No. 31/2023. - Assessee's contention: The assessee contended that the CBDT Notification No. 31/2023, which enhances the exemption limit, is a beneficial and remedial provision applicable to pending proceedings, as held by various ITAT benches and recognized by the Kerala High Court in Sanchar Nigam Pensioners Welfare Association v. Union of India. The assessee also argued that being governed by CCS (Pension Rules), 1972, they should be treated at par with Central Government employees for exemption under Section 10(10AA)(i). - Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH

Before: Shri Tapas Ram Misra & Shri R. Govindarajan

For Appellant: Shri Vipul Gohil, A.R
For Respondent: Ms. Kalpana Singh, Sr. D.R

PER R. GOVINDARAJAN, ACCOUNTANT MEMBER:

The assessee has filed the two appeals against the orders dated 19-06-2026 passed by Commissioner of Income Tax (Appeals)/Addl/JCIT(A)-1, Coimbatore (in short, referred to as the CIT(A)) u/s. 250 of the Income Tax Act, 1961 (herein referred to as “the Act”) relating to Assessment Year 2020-21 & 2021-22 respectively.

2.

The assessee raised the following grounds of appeals:-

I.T.A Nos. 2525 & 2526/Ahd/2026 Usmangani Ahemadbhai Manva, A.Y. 2020-21 & 2021-22 ITA No. 2525-Ahd-2026 A.Y. 2020-21 “1. The Lrd. CIT A has erred in law and on facts in not directing the Lrd. AO to grant full and unconditional exemption unde

The order continues below.

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