The settlement consideration received by the assessee for...

The settlement consideration received by the assessee for relinquishing the right to seek registration of sweat equity shares, after cessation of employment, cannot be treated as 'profits in lieu of salary' u/s 17(3) of the Income Tax Act. The consideration was for unconditional relinquishment of the right to enforce registration of shares and not connected with termination of employment or modification of service terms. The Tribunal erred in segregating the consideration into 'capital gains' and 'salaries' components. The entire consideration is to be treated as 'capital gains' and not 'profits in lieu of salary'. The High Court allowed the appeal, set aside the Tribunal's order, and answered the question of law in favor of the assessee.