BOAZ KOLAKALURI,HYDERABAD vs. INCOME TAX OFFICER, WARD-1, CHIRALA

ITA 2117/HYD/2026Status: DisposedITAT Hyderabad09 October 2026AY 2020-2118 pages
AI SummaryAllowed

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 Income-tax Act, 1961. The Tribunal noted a consistent view taken by various Coordinate Benches of the Tribunal across the country, holding that such compensation is akin to retrenchment compensation and qualifies for exemption under Section 10(10B), especially in light of the second proviso to the section. The Tribunal followed decisions in cases like Raghavendra Latha Madhavi & 3 Others vs. ITO and Shri Sekar Gnanaprakasam Vs. DCIT. The Tribunal directed the Assessing Officer to verify the assessee's claim in light of these findings and allow the exemption under Section 10(10B), thereafter determining the tax payable or refundable and granting interest under Section 244A where admissible. The issue of capital receipt was not explicitly decided but subsumed within the Section 10(10B) exemption.

What were the facts?

The assessee, Boaz Kolakaluri, an individual employed with BSNL, opted for the Voluntary Retirement Scheme (VRS) - 2019 and received ex-gratia compensation. For assessment years 2020-2021 and 2021-2022, the assessee initially offered this compensation to tax. Subsequently, the assessee filed appeals before the Addl./JCIT(A) claiming exemption under Section 10(10B) of the Income-tax Act, 1961, citing ignorance of law and incorrect professional advice. The Addl./JCIT(A) rejected these claims, treating the assessee as not a 'workman' under Section 10(10B) and confirming the Assessing Officer's order. The assessee then filed appeals before the ITAT, Hyderabad, with a delay of 22 days, which was condoned due to the assessee's father's medical condition.

What were the issues?

1. Whether the ex-gratia compensation 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 argued that the compensation is fully exempt under Section 10(10B), akin to retrenchment compensation, and that the initial claim under Section 10(10C) was due to ignorance of law and professional advice. The assessee relied on judicial precedents where similar compensation was held exempt under Section 10(10B). The revenue, through the Addl./JCIT(A), argued that the assessee is not a 'workman' as per the conditions laid down in Section 10(10B), thus disallowing the exemption. The revenue did not present any contrary judicial precedent before the Tribunal. 2. Whether the compensation received is a capital receipt not in the nature of income and hence not chargeable to tax? The assessee contended this as a 'without prejudice' argument, stating it was a one-time payment for loss of future employment due to organizational restructuring.

Which sections of the Income-tax Act were involved?

Section 10(10B),Section 10(10C),Section 10(10AA),Section 244A,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

Pronounced: 09.10.2026

PER VIJAY PAL RAO, VICE PRESIDENT:

These two appeals by the Assessee are directed against two separate Orders both dated 20.03.2026 of the learned Addl/JCIT(A) Faridabad, for the assessment years 2020-2021 and 2021-2022. 2. There is a delay of 22 days in filing these appeals before the Tribunal. The assessee has filed a petition for condonation of delay supported by the affidavits of the assess

The order continues below.

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