CHANDRAKANT FULA PATIL,VADODARA vs. ITO WARD 4(1)(7) VADODARA, VADODARA

ITA 2808/AHD/2026Status: DisposedITAT Ahmedabad22 October 2026AY 2020-202110 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue raised by the assessee is squarely covered by the decisions of the Co-ordinate Benches of the ITAT. Specifically, the Tribunal followed its own order in ITA Nos. 2387 & 2388/Ahd/2025 for AYs 2020-21 & 2021-22 in the case of Jayeshkumar Tulsidas Sutaria Vs. ITO. The Tribunal noted that in similar cases involving BSNL VRS-2019 compensation, exemption under Section 10(10B) was granted, and the assessee was eligible for a refund of TDS. The Tribunal also referenced the CBDT's Notification No. 31/2023 dated 24.05.2023, which increased the limit for leave encashment exemption under Section 10(10AA) to Rs. 25,00,000. Respectfully following these precedents, the Tribunal decided the issue in favour of the assessee. The assessee is entitled to exemption under Section 10(10B) for the entire amount of retrenchment compensation (VRS compensation) and leave encashment. The Assessing Officer (AO) was directed to grant the appropriate relief. The issue of whether the CIT(A) erred in dismissing the appeal as not being an appealable order under Section 246(1) was implicitly addressed by the Tribunal deciding the substantive grounds on merits.

What were the facts?

The assessee, Chandrakant Fula Patil, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the Ld. Addl./JCIT Commissioner of Income Tax(Appeal), Mysore, dated 31.07.2026, for Assessment Year 2020-21. The assessee, an employee of BSNL, received compensation under the BSNL Voluntary Retirement Scheme (VRS), 2019, amounting to Rs. 17,62,714. The assessee also received leave encashment of Rs. 13,71,410. The assessee claimed full exemption for the VRS compensation under Section 10(10B) and for the leave encashment under Section 10(10AA) of the Income-tax Act, 1961, citing enhanced limits. The Ld. CIT(A) had dismissed the assessee's appeal.

What were the issues?

1. Whether the compensation received by the assessee under the BSNL Voluntary Retirement Scheme-2019, approved by the Central Government, is fully exempt from income tax under Section 10(10B) of the Income-tax Act, 1961, particularly in light of the second proviso to the said section. 2. Whether the compensation received by the assessee constitutes a capital receipt and is therefore not taxable. 3. Whether the leave encashment amount of Rs. 13,71,410 is fully exempt under Section 10(10AA) of the Income-tax Act, 1961, based on the revised limit of Rs. 25,00,000 notified by the CBDT. Assessee's Contentions: - The VRS compensation is fully exempt under Section 10(10B) as it's a special protection package approved and funded by the Central Government. - The compensation is a capital receipt and not taxable. - The leave encashment is fully exempt under Section 10(10AA) as per the revised limit of Rs. 25,00,000 notified by CBDT Notification No. 31/2023 dated 24.05.2023. - Relied on ITAT decisions in Goverdhan D Bhambhani, Neelam Gupta, Ram Dev Daiya, and Jayeshkumar Tulsidas Sutaria. Revenue's Contentions: - The revenue supported the order passed by the lower authorities and requested confirmation of the disallowance.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 10(10AA),Section 250,Section 246(1),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-

For Appellant: Shri Kumar R Pandya, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 21.10.2026Pronounced: 22.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

-

The captioned appeal has been filed by the assessee against the order passed by the Ld. Addl./JCIT Commissioner of Income Tax(Appeal), Mysore, vide order dated 31.07.2026. (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2020-

21.

ITA No.2808 /Ahd/2026 Asst. Year :(2020-21 ) - 2–

The assessee has raised the following grounds of appeal:

2.1.

This Appeal before Income Tax Appellate Tribunal is filled to quash and set aside the Order passed u/s 250 by CIT(A) in Appeal No. ADDL/JCIT (A) MYSORE/10062/2019-20 and may be pleased to grant the fu

The order continues below.

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