BSNL VRS compensation treated as retrenchment compensation and exempt as capital receipt under section 10(10B)

Compensation paid to BSNL employees under the Voluntary Retirement Scheme, 2019 was treated as retrenchment compensation arising from forced retirement under the revival package. On that basis, it was regarded as a capital receipt not taxable as salary income, and the exemption was held to fall under section 10(10B), rather than being confined to the limit-based relief under section 10(10C). The Tribunal followed its earlier coordinate bench rulings on identical facts and accepted the assessee's claim for exemption.

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Issues: Whether compensation received under the BSNL Voluntary Retirement Scheme, 2019 was retrenchment compensation in the nature of a capital receipt exempt under section 10(10B) of the Income-tax Act, 1961, and not merely eligible for the limit under section 10(10C).

Analysis: The Tribunal followed its earlier coordinate bench decisions on identical facts and held that the amount paid to BSNL employees under the voluntary retirement scheme was retrenchment compensation arising from forced retirement under the revival package. It accepted that the compensation was not taxable as salary income and that the benefit was governed by section 10(10B), which applies to such compensation as a capital receipt, rather than being confined to the exemption contemplated by section 10(10C).

Conclusion: The compensation received under BSNL VRS-2019 was held to be exempt under section 10(10B) and the assessee's claim was allowed.

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