SUJIT INDRAVADAN PARIKH,ANAND vs. ITO, WARD 1, ANAND, ANAND

ITA 2727/AHD/2026Status: DisposedITAT Ahmedabad07 October 2026AY 2021-226 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the compensation received under the BSNL VRS-2019 is eligible for exemption under Section 10(10B) of the Act. This decision was based on the consistent view of the Tribunal, including jurisdictional benches, which had held similarly in the cases of identically placed BSNL employees. The Tribunal followed its own decisions in Jayeshkumar Tulsidas Sutaria, Kirtida Rajeshkumar Shah, Chhaganlal Bhimabhai, and Pravinkumar Ramjibhai Patel, as well as decisions from the Chennai and Pune Benches. For the issue of leave encashment exemption under Section 10(10AA) for AY 2020-21, the Tribunal admitted the ground, even though it was not raised before the CIT(A), citing the Supreme Court's decision in National Thermal Power Corporation Ltd. vs. CIT. Following the Kerala High Court's decision in Sanchar Nigam Pensioners’ Welfare Association vs. Union of India, the Tribunal directed the Assessing Officer to grant the benefit of exemption under Section 10(10AA) for the full amount of leave encashment, provided the assessee was an employee of the Department of Telecom (DoT) absorbed by BSNL and governed by Rule 37A of the CSS (Pension) Rules. The alternative contention regarding CBDT Notification No. 31 of 2023 was not considered in light of the directions given. Both grounds were allowed for statistical purposes.

What were the facts?

The assessee, an ex-employee of BSNL, received compensation under the BSNL Voluntary Retirement Scheme (VRS) - 2019 for Assessment Years (AY) 2020-21 and 2021-22. The assessee did not initially claim exemption under Section 10(10B) of the Income Tax Act, 1961, for the VRS compensation, amounting to INR 12,92,499/- for AY 2020-21 and INR 49,37,795/- for AY 2021-22, as tax was deducted at source. For AY 2020-21, the assessee's leave encashment of INR 3,76,688/- was partially exempted up to INR 3,00,000/- under Section 10(10AA). Subsequently, relying on ITAT decisions, the assessee filed appeals before the Commissioner of Income Tax (Appeals) [CIT(A)] claiming exemption under Section 10(10B) for the VRS compensation and full exemption under Section 10(10AA) for leave encashment. The CIT(A) dismissed the appeals, holding that the VRS compensation was not eligible for exemption under Section 10(10B). The assessee then filed appeals before the ITAT.

What were the issues?

1. Whether the compensation received by the assessee under the BSNL Voluntary Retirement Scheme, 2019, is eligible for exemption under Section 10(10B) of the Income-tax Act, 1961, as argued by the assessee, citing ITAT decisions including jurisdictional ones. The revenue's contention is not recorded. 2. Whether the assessee is eligible for exemption under Section 10(10AA) of the Income-tax Act, 1961, for the entire leave encashment amount of INR 3,76,688/- for AY 2020-21, as argued by the assessee, relying on CBDT Notification No 31/2023, a Jaipur ITAT decision, and a CBDT Circular. The revenue's contention is not recorded. The CIT(A) had restricted the exemption to INR 3,00,000/-.

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: Shri Krishan Kumar, Sr. D.R

PER R. GOVINDARAJAN, ACCOUNTANT MEMBER:

The assessee has filed the two appeals against the order dated 23-07-2026 passed by Commissioner of Income Tax (Appeals)/Addl/JCIT(A)-1, Gurugram (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 Years 2020-21 & 2021-22. 2. The assessee raised the following grounds of appeals:- ITA No. 2726-Ahd-2026 A.Y. 2020-21 “1. The Lrd. CIT Appeal has erred in law and on facts in confirming the denial of exemption under section 10(10B) of the Income-tax Act, 1961 in respect of compensation received by the Appellant under the BSNL Voluntary Retirement Scheme, 2019,

The order continues below.

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