PARTHA SARATHI PAL,BSNL QUATER, NORTH GATE, AGARTALA,WEST TRIPURA vs. INCOME TAX OFFICER (WARD - 1, AGARTALA), AAYAKAR BHAWAN, AGARTALA,TRIPURA

ITA 310/GTY/2026Status: DisposedITAT Guwahati09 October 2026AY 2020-202111 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee. The Tribunal respectfully followed the orders of the Co-ordinate Bench in the case of Ananga Mohan Das Vs. ITO Ward-42(1), Murshidabad, and similar cases. The reasoning was that the BSNL VRS-2019 scheme was considered a retrenchment scheme by coordinate benches, making the compensation received eligible for exemption under Section 10(10B) of the Act. The Tribunal also directed the Assessing Officer to grant exemption in respect of accumulated leave encashment. The ratio decidendi is that compensation received under the BSNL VRS-2019 scheme, when treated as retrenchment compensation, is eligible for exemption under Section 10(10B), and accumulated leave encashment is also to be granted exemption, following precedents set by other benches of the Tribunal. The operative direction is to allow the appeal and direct the Assessing Officer to grant the specified exemptions.

What were the facts?

The assessee, Partha Sarathi Pal, an ex-employee of BSNL, is appealing against an order of the Ld. Addl./Joint Commissioner of Income Tax (Appeals). The assessment year in question is 2020-21. The assessee had opted for the BSNL Voluntary Retirement Scheme (VRS) 2019 and received ex-gratia compensation and accumulated leave encashment. Due to a lack of awareness regarding exemption provisions, the assessee offered this compensation for taxation and did not claim exemptions in the original return. The CPC, Bengaluru issued an intimation under Section 143(1) without granting any exemption. The assessee's appeal to the Ld. CIT(A) was dismissed, leading to this appeal before the ITAT. The dispute centers on the eligibility of exemption for the VRS compensation and leave encashment.

What were the issues?

1. Whether the 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, as a retrenchment compensation. - Assessee's Contention: The assessee argues that the BSNL VRS-2019 was a retrenchment scheme aimed at reviving BSNL and MTNL by reducing employee costs. Reliance is placed on the ITAT Chandigarh Bench decision in Harish Kumar vs. ITO, which held similar VRS compensation as exempt under Section 10(10B). The assessee also relies on decisions of coordinate benches allowing similar claims. - Revenue's Contention: The revenue's position is not explicitly recorded in terms of arguments presented before the ITAT, but the Ld. CIT(A)'s order implies a denial of exemption based on the applicability of specific notifications and the assessee's failure to claim the exemption in the original return or revised return. 2. Whether the accumulated leave encashment received by the assessee is eligible for exemption under Section 10(10AA) of the Income Tax Act, 1961, considering the applicable limits. - Assessee's Contention: The assessee contends that the leave encashment should be fully exempt, referencing the CBDT's Notification No. 31/2023 which increased the limit under Section 10(10AA). However, the judgment indicates reliance on ITAT decisions that allowed exemption for leave encashment in similar VRS cases. - Revenue's Contention: The Ld. CIT(A) held that Notification No. 31/2023 was not applicable as it came into force on April 1, 2023, and the assessee's case pertains to AY 2020-21. Therefore, the earlier notification (Notification No. 123/2002/F. No. 200/23/98-ITA-I dated 31/05/2002) was applicable, restricting the exemption to Rs. 3,00,000/-.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “DB” BENCH, GAUHATI

Before: Shri Laxmi Prasad Sahu & Shri Yogesh Kumar US

Per Laxmi Prasad Sahu, Accountant Member:

The captioned Appeal filed by the Assessees against the order passed u/s 250 of the Income Tax Act, 1961(hereinafter referred to as “the Act”) by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) [hereinafter referred to as “the Ld. CIT(A)”].On going through the Grounds of the Assessees, we noticed that the issues raised by the Assessee are regarding not granting exemption on the compe

The order continues below.

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