Ex-gratia under government-approved voluntary retirement scheme for public sector revival held retrenchment compensation, fully exempt u/s 10(10B) as capital receipt, not capped u/s 10(10C); new claims admissible in appeal.

Headnote:(A) Income-tax Act, 1961 - Sections 10(10B), 10(10C), 143(1)(a), 250 - Exemption on ex-gratia compensation received under voluntary retirement scheme - Compensation received by employees under scheme approved by government for revival plan, though termed voluntary, held to be retrenchment compensation as scheme was forced due to losses, unpaid salaries, and workforce reduction for viability - Employees covered under Industrial Disputes Act - Entire amount exempt as capital receipt u/s 10(10B), not limited to Rs.5 lakh u/s 10(10C) - New claim admissible before appellate authorities to determine correct tax liability. (Paras 3, 8, 9, 13, 17)

(B) Appellate jurisdiction - New/additional grounds - Authorities duty-bound to entertain claims not raised before AO if they assist in correctly determining tax due, preventing undue revenue enrichment - Delay in appeals condoned where justified by subsequent judicial precedents. (Paras 5, 9, 15)

Facts of the case:
Multiple appeals by employees against intimation orders u/s 143(1)(a) and CIT(A) orders - Assessees received ex-gratia under voluntary retirement scheme implemented for revival amid losses - Initially claimed exemption u/s 10(10C) limited to Rs.5 lakh, paid tax on balance; new claim u/s 10(10B) for full exemption raised first before CIT(A), rejected on delay or as new claim.

Findings of Court:
Compensation under scheme qualifies as retrenchment compensation exempt u/s 10(10B) - Direct AO to verify exact amount from Form 16, allow full exemption on revised computation, grant refund if entitled after verification.

Issues: Whether ex-gratia under scheme is retrenchment compensation exempt u/s 10(10B) or voluntary retirement payment capped u/s 10(10C); admissibility of new exemption claim before appellate authorities; condonation of delay in appeals.

Ratio Decidendi: Scheme, though labelled voluntary, was retrenchment in substance due to government-mandated revival plan involving workforce reduction; follows precedents holding such payments as capital receipts exempt u/s 10(10B) for employees under Industrial Disputes Act - Appellate authorities can admit new claims per Supreme Court ruling to ensure correct tax liability.

Result: All appeals allowed.

Table of Content
1. bsnl vrs 2019 compensation as retrenchment under revival plan. (Para 1 , 2 , 3 , 4)
2. assessee arguments for s.10(10b) exemption; dr opposes. (Para 5 , 6 , 7)
3. appellate authorities can entertain new exemption claims. (Para 8 , 9 , 10 , 11)
4. distinction between s.10(10c) vrs and s.10(10b) retrenchment. (Para 12 , 13)
5. bsnl vrs compensation qualifies as exempt retrenchment u/s 10(10b). (Para 14 , 15 , 16 , 17)
6. all assessee appeals allowed with refund directions. (Para 18)

आदेश / ORDER

The captioned appeals at the instance of respective assessee(s) pertaining to A.Yrs. 2020-21 and 2021-22 are directed against the separate orders framed by Addl/JCIT(A)-5, Chennai/National Faceless Appeal Centre, Delhi arising of respective Intimation orders passed u/s.143(1)(a) of the Act.

2. Since common issues have been raised in the above appeals I proceed to adjudicate these appeals by way of this consolidated order for the sake of convenience.

3. The common issue raised in these bunch of appeals is that whether the amount received from Bharat Sanchar Nigam Limited (BSNL) on account of the forced retirement through the BNSL Voluntary Retirement Scheme, 2019 is in the nature of Retrenchment and is a Capital receipt not liable to be taxed as per the provisions of section 10(10B) of the Act.

4. Brief facts relating to all the assessee(s) in the instant appeals are that they are employed with BSNL which is under administrative control of Department of Telecommunications, Govt. of India. In order to revive BSNL, the Union Cabinet in its meeting dated 23.10.2019 approved the revival plan of BSNL and Mahanagar Telephone Nigam Limited, Mumbai (MTNL) vide Office Memorandum dated 29.10.2019 issued by Department of Telecommunications. As part of the revival package the Government decided to reduce the work force through BSNL Voluntary Retirement Scheme, 2019 to the employees of aged 50 years and above and on such retirement Ex-gratia compensation has been paid. The amount so received by the instant employees is stated to have been offered to tax after claiming exemption u/s.10(10C) of the Act Rs.5.00 lakh and have paid the due taxes on the remaining amount of compensation over and above Rs.5.00 lakhs (in cases where such compensation exceeds Rs.5.00 lakhs). Admittedly, in this bunch of appeals the claim that the entire amount of compensation received from BSNL being Capital receipt is not liable to tax as per the provisions of section 10(10B) of the Act has been made for the first time before ld.CIT(A). It is also noticed that in some cases ld.CIT(A) dismissed the appeals on account of delay in filing of the appeals and in some cases ld.CIT(A) has not entertained the new claim made for the first time holding that the same should have been made in the revised return of income. Aggrieved with the finding of ld.CIT(A), the assessee(s) are in appeal before this Tribunal.

5. Ld. Counsel for the assessee at the outset justifying the delay in filing of appeals before ld.CIT(A) submitted that the issue of claiming benefit of exemption u/s.10(10B) of the Act for the amount received as compensation from BSNL for the force retirement has been adjudicated by the Coordinate Benches of Chandigarh as well as Ahmedabad and other Tribunals consistently holding in favour of the assessee(s). He also submitted that in various cases dealt by the Coordinates Benches, the alleged claim of exemption u/s.10(10B) of the Act has been made for the first time and the same has been admitted by the Tribunal and relief has been granted. Reliance placed on the decision of Coordinate Bench, Ahmedabad in the case of Jayesh Kumar Tulsidas Sutaria Vs. ITO (2026) 183 taxmann.com 587 (Ahmedabad- Trib.)

6. So far as the claim that the alleged sum received in the form of Retrenchment Compensation from BSNL under the forced retirement is a Capital receipt not chargeable to tax and exemption available u/s.10(10B) of the Act has been decided in favour of the assessee(s), ld. Coun

Click Here to Read the rest of this document