PREETI DUBEY,JHANSI vs. INCOME TAX OFFICER, WARD-2(3)(5), JHANSI

ITA 438/AGR/2026Status: DisposedITAT Agra06 October 2026AY 2020-2116 pages
AI SummaryAllowed

What were the facts?

The assessee, Preeti Dubey, an ex-employee of Bharat Sanchar Nigam Limited (BSNL), received ex gratia compensation under a BSNL Voluntary Retirement Scheme (VRS) in Assessment Years 2020-21 and 2021-22. She initially offered this amount to tax in her return, claiming a partial exemption of Rs. 5,00,000 under Section 10(10C) of the Income Tax Act, 1961. Subsequently, relying on a Tribunal decision in *Harish Kumar vs. ITO*, she sought full exemption under Section 10(10B) for the compensation received. The Assessing Officer (CPC) processed her return accepting the returned income. The assessee appealed to the CIT(A) to claim the exemption under Section 10(10B). The CIT(A) dismissed the appeals, holding that Section 10(10B) applies to retrenchment compensation, not voluntary retirement, and that the claim was raised for the first time in appeal, citing *Goetze (India) Ltd. vs. CIT*.

What did the Tribunal hold?

The Tribunal held that the ex gratia compensation received by the assessee under the BSNL Voluntary Retirement Scheme (VRS), 2019, was fully exempt from tax under Section 10(10B) of the Income Tax Act, 1961. The Tribunal respectfully followed the decisions of the ITAT Pune, ITAT Ahmedabad in *Vishnu Mohan T Nair v. Income Tax Officer*, and ITAT Chandigarh in *Harish Kumar (BSNL Employee) vs. ITO*. The Tribunal found support from the principle that substance matters over form in determining retrenchment compensation, as per the Supreme Court's observation in *Mahendra Singh Dhantwal v. Hindustan Motors Ltd.*, and that a pragmatic approach should be taken for employees in lower rungs. The Tribunal set aside the impugned findings of the CIT(A) and allowed the grounds of appeal. The assessee was directed to place 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. The issue of whether the claim was a fresh claim not permissible in appeal was implicitly addressed by allowing the exemption based on precedent.

What were the issues?

1. Whether the ex gratia compensation received by the assessee under the BSNL Voluntary Retirement Scheme, 2019, is fully exempt from tax under Section 10(10B) of the Income Tax Act, 1961, as claimed by the assessee, or if it is not applicable as held by the CIT(A)? Assessee's Contention: The assessee argued that the compensation received under the BSNL VRS, 2019, is fully exempt under Section 10(10B) based on the ITAT Chandigarh's decision in *Harish Kumar vs. ITO*. She contended that the initial offer to tax was due to a lack of clarity and that the CPC erred in not allowing the exemption. Revenue's Contention: The Revenue, through the CIT(A)'s order, argued that Section 10(10B) is applicable only to compensation received at the time of retrenchment under the Industrial Disputes Act, 1947, or under a Central Government-approved scheme for retrenchment, not for voluntary retirement. Furthermore, the CIT(A) held that the claim for exemption under Section 10(10B) was a fresh claim made for the first time during appellate proceedings, which is not permissible without a revised return, citing *Goetze (India) Ltd. vs. CIT*.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 10(10C),Section 250,Section 139(1),Section 139(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA (SMC

Before: SHRI SUNIL KUMAR SINGH & SHRI BRAJESH KUMAR SINGH

For Appellant: Ms. Ravjot Kaur, CA
Hearing: 22.07.2026Pronounced: 06.10.2026

PER : BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER: These two appeals are directed against the respective impugned orders dated 20.03.2026 and 25.03.2026 passed in appeal No. ADDL/JCIT(A)-2 COIMBATORE/10059/2019-20 and ADDL/JCIT(A)-2 Coimbatore/10047/2020-21 by the ld. ADDL/JCIT(A)-2, Coimbatore (hereinafter referred to as “CIT(A)) u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21 & 2021-22 respectively, wherein ld. CIT(A) has dismissed assessee’s both the appeals.

ITA No.438 & 439/Agr/2026

2.

Since both the appeals are inter-related to the same assessee and common question of law and facts is involved therein, they were

The order continues below.

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