Retrenchment compensation under BSNL VRS 2019 qualifies as a capital receipt exempt under section 10(10B).

BSNL employees' payments under the BSNL Voluntary Retirement Scheme, 2019 were treated as retrenchment compensation linked to workforce reduction in the BSNL and MTNL revival package, not as ordinary voluntary retirement benefits. The ITAT Pune followed coordinate bench authority and the settled principle that appellate authorities may consider a new legal claim to determine the correct tax liability, and held that such receipts are capital in nature and exempt under section 10(10B) of the Income-tax Act, 1961. It further held that the monetary ceiling applicable to section 10(10C) did not govern the claim, so the assessee's exemption claim succeeded.

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Issues: Whether the amount received by BSNL employees under the BSNL Voluntary Retirement Scheme, 2019 is retrenchment compensation in the nature of a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961, and not merely a sum exempt up to the limit under section 10(10C) of that Act.

Analysis: The Tribunal noted that the scheme was introduced as part of the revival package of BSNL and MTNL with the object of reducing workforce. It followed earlier coordinate bench decisions holding that payments made under the BSNL VRS 2019 were not ordinary voluntary retirement receipts but compensation linked to forced retirement and retrenchment. The Tribunal also relied on the settled view that appellate authorities can entertain a new legal claim to determine the correct tax liability, and on the consistent line of authority treating such compensation as exempt under section 10(10B). On that basis, it distinguished the case from exemption available under section 10(10C), which is subject to a monetary ceiling.

Conclusion: The amount received under the BSNL Voluntary Retirement Scheme, 2019 was held to be retrenchment compensation and a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961. The restriction to section 10(10C) did not apply, and the assessee's claim succeeded.

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