ITAT Allows Section 10(10B) Exemption on BSNL VRS-2019 Compensation:

The assessees received compensation under BSNL VRS-2019 but did not claim exemption under Section 10(10B) of the Income Tax Act, 1961, while filing their income tax returns, believing that the compensation was taxable. In the lead case, Raysinh Atabhai Vala had received compensation of Rs 3,16,797 for Assessment Year 2021–22. The return was processed by the CPC followed by a rectification order under Section 154 dated February 25, 2026.

Subsequently, the assessees sought exemption under Section 10(10B) before the CIT(A). However, the CIT(A) rejected the claims. 

The Tribunal observed that the issue had already been considered in Jayeshkumar Tulsidas Sutaria Vs ITO Case wherein the Tribunal had held that compensation received under BSNL VRS-2019 was exempt under Section 10(10B) and directed the AO to grant the refund due.

The Tribunal noted that the facts and legal position remained unchanged and that the Revenue had failed to distinguish the earlier decisions either on facts or in law. Accordingly, the Tribunal held that the compensation received under BSNL VRS-2019 was eligible for exemption under Section 10(10B). It directed the AO to recompute the taxable income and grant the refund due, if any, in accordance with law. The assessees were also directed to furnish details of the compensation received and revised income computations claiming the exemption.

The Tribunal allowed all four appeals and confirmed that compensation received under BSNL VRS-2019 was eligible for exemption under Section 10(10B) of the Income Tax Act, 1961.