Retrenchment Compensation Exemption under Section 10(10B) confirmed; VRS payments excluded from taxable income, relief allowed to assessee.

Retrenchment compensation paid under a government approved Voluntary Retirement Scheme is exempt under the statutory exemption for such payments; the tribunal applied a coordinate bench precedent on substantially similar facts and allowed the exemption claim on merit, rejecting delay as a bar. The operative effect is that the VRS payment received by the assessee is not includible in taxable income and the appeals are allowed in the assessee's favour.

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Issues: Whether the amount of Rs. 16,53,076 received by the assessee under the BSNL Voluntary Retirement Scheme-2019, granted as retrenchment compensation under a Government-approved scheme, is exempt from income tax under Section 10(10B) of the Income-tax Act, 1961.

Analysis: The assessee received compensation under a Government-approved VRS implemented for BSNL employees. The legal framework for exemption of retrenchment/voluntary retirement compensation under a government-approved scheme is Section 10(10B) of the Income-tax Act, 1961. A coordinate bench of the Tribunal had considered identical facts and law in ITA Nos. 2387 & 2388/Ahd/2025 for AYs 2020-21 & 2021-22 and allowed relief by holding such compensation exempt under Section 10(10B). The present matter involves the same legal proposition and substantially similar factual matrix; consequently the prior coordinate-bench ruling applies mutatis mutandis. The question of delay and condonation under Section 249(3) was considered in the coordinate-bench decision and did not preclude adjudication on merits; accordingly the exemption claim merits allowance on the merits.

Conclusion: The amount of Rs. 16,53,076 received under the BSNL VRS-2019 is exempt from income tax under Section 10(10B) of the Income-tax Act, 1961. The appeals are allowed in favour of the assessee.

Ratio Decidendi: Retrenchment compensation paid under a Government-approved voluntary retirement/retrenchment scheme falls within the exemption provided by Section 10(10B) of the Income-tax Act, 1961 and is not includible in the recipient's taxable income.

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