Retrenchment compensation under BSNL's workforce-reduction scheme is treated as exempt capital receipt rather than voluntary-retirement compensation.

Compensation under the BSNL Voluntary Retirement Scheme, 2019, is discussed as retrenchment compensation rather than voluntary-retirement compensation because the scheme formed part of a Government-approved workforce-reduction revival plan. On that characterisation, the notes state that the payment qualifies as a capital receipt exempt under Section 10(10B) of the Income-tax Act, rather than being governed by Section 10(10C). They also record that delay in pursuing exemption claims may be condoned where returns were filed on professional advice, sufficient cause exists, and consistent treatment is needed on identical facts. Revised computations may be submitted for verification and consequential refund where due.

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Issues: (i) Whether delay in filing the appeals challenging taxation of compensation received under the BSNL Voluntary Retirement Scheme, 2019, should be condoned; (ii) Whether compensation received under the BSNL Voluntary Retirement Scheme, 2019, constitutes retrenchment compensation exempt under Section 10(10B) of the Income-tax Act, 1961.

Issue (i): Whether delay in filing the appeals challenging taxation of compensation received under the BSNL Voluntary Retirement Scheme, 2019, should be condoned.

Analysis: The assessees had filed their returns on the basis of professional advice and subsequently raised the exemption claim. The explanations for delay disclosed sufficient cause, and substantial justice was preferred over procedural delay. Differing treatment by first appellate authorities on identical facts also warranted a consistent approach.

Conclusion: The delay was liable to be condoned, in favour of the assessees.

Issue (ii): Whether compensation received under the BSNL Voluntary Retirement Scheme, 2019, constitutes retrenchment compensation exempt under Section 10(10B) of the Income-tax Act, 1961.

Analysis: The BSNL scheme formed part of a Government-approved revival plan aimed at workforce reduction. Applying the binding coordinate-bench view on identical facts, the compensation under the scheme was characterised as retrenchment compensation under Section 10(10B), rather than voluntary-retirement compensation governed by Section 10(10C). The absence of a contrary jurisdictional High Court decision supported following that consistent view.

Conclusion: The compensation is a capital receipt exempt from tax under Section 10(10B) of the Income-tax Act, 1961, in favour of the assessees.

Final Conclusion: The impugned first appellate findings were set aside, and the assessees may furnish revised computations to the jurisdictional Assessing Officers for verification and consequential tax refund, where due.

Ratio Decidendi: Compensation paid under the BSNL Voluntary Retirement Scheme, 2019, as part of the Government-approved workforce-reduction revival plan, is retrenchment compensation qualifying for exemption under Section 10(10B) of the Income-tax Act, 1961.

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