ITAT Grants Exemption u/s 10(10B) for VRS Compensation Citing Central Government-Approved Scheme Benefiting Employees [Read Order]

The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) granted an exemption under section 10(10B) for Voluntary Retirement Scheme (VRS) compensation citing that the Central-Government approved schemes that benefited Employees. Dayal Singh (assessee) filed his Income Tax Return and offered Rs. 19,98,055 on account of VRS compensation. The VRS compensation was received from HMT Ltd (Tractor Division). Later, the assessee came to know that the amounts received under VRS were exempted under section 10(10B) of the Act. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today

The assessee filed an appeal before the Commissioner of Income Tax (appeals)[CIT(A)]. The appeal was delayed by 691 days. The CIT(A) dismissed the appeal observing that the assessee failed to show sufficient cause for the delay in filing the appeal. Aggrieved by the order, the CIT(A) filed an appeal before the Tribunal. The counsel for the assessee relied on the judgment of the tribunal in the case of Deepak Budhani Vs. ITO for the condonation of the delay in filing the appeal. The counsel submitted that the tribunal had condoned the delay in filing the appeal and sought to condone the delay in filing the appeal. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today The counsel for the assessee also relied on the tribunal’s judgment in the case of Suresh Pal Chauhan Vs. ITO, the facts were identical to the case of the assessee.

The counsel submitted that it was held in the case that any scheme extending special protection for the workmen with the approval of the central government then the amount received by the employee can be exempted under section 10(10B) of the act. The counsel further submitted that in the case of Suresh Pal Chauhan, the tribunal granted an exemption under section 10(10B) to the employee, who received VRS compensation from HMT Ltd (Tractor Division).

Therefore, the counsel sought to grant an exemption with reference to the case. Become PF & ESIC Pro: Basic to Advance Course – Enroll Today The tribunal comprising Sanjay Garg (Judicial Member) accepted the contention of the assessee’s counsel and decided in the favour of the assessee. Therefore, the tribunal held that the assessee is eligible for exemption under section 10(10B) of the act. Thereby the appeal of the assessee was allowed.

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