ITAT Allows 10 Appeals of Former BSNL Employees, Grants Relief on VRS Compensation
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has allowed 10 appeals filed by former employees of Bharat Sanchar Nigam Limited (BSNL) for the assessment years 2020-21 and 2021-22. The cases were heard together as they involved similar facts and the same legal issue.
The taxpayers had opted for BSNL’s Voluntary Retirement Scheme, 2019 (VRS-2019) and received ex-gratia compensation from the company. However, they had initially offered the compensation to tax while filing their income-tax returns. Tax was also deducted at source (TDS) on the amounts received.
The taxpayers then contended that the compensation was exempt under Section 10(10B) of the Income-tax Act, subject to the conditions specified under Rule 2BA of the Income-tax Rules. They said that when they filed their returns they were unaware of the exemption available under the law.
The appeals were initially dismissed by the Commissioner of Income Tax (Appeals) on the ground that they had been filed late and that sufficient cause for the delay had not been established.
The ITAT, however, accepted the taxpayers’ explanation and condoned the delay. The Tribunal held that the taxpayers were prevented by sufficient cause from filing their appeals within the prescribed time and therefore admitted the appeals for consideration on merits.
While deciding the main case of Mahendrakumar Narottamdas Patel, the Tribunal relied on its earlier decision in the case of Suman Nandlal Raval. In that case, the Tribunal had held that where the income was not taxable due to the applicable exemption, the taxpayer was entitled to claim the benefit and receive a refund of the TDS deducted.
The Ahmedabad Tribunal also took note of the earlier decision of the Chandigarh Bench in the case of Harish Kumar vs. ITO, where compensation received under the same BSNL VRS-2019 scheme was held eligible for exemption under Section 10(10B), subject to fulfilment of the prescribed conditions.
Since the facts and legal issues in all the cases were identical, the Tribunal applied the same decision to the remaining appeals.
The order has come as a relief to the former BSNL employees, as they will be able to claim the applicable tax exemption on the VRS-2019 compensation and seek refund of the TDS, provided the legal conditions are fulfilled.
Citation: MahendraKumar Narottamdas Patel Vs ITO (ITAT Ahmedabad); ITA Nos. 1212-1213/AHD/2026; 17/07/2026; AY-2020-21 & 2021-22
