The assessee, an employee who resigned voluntarily from Pfizer...

The assessee, an employee who resigned voluntarily from Pfizer Healthcare India Pvt. Ltd., Aurangabad, received compensation which was accepted as capital in nature by the Assessing Officers after reopening assessments. The Revenue did not challenge this treatment nor initiate any section 263 proceedings, allowing it to attain finality. Relying on the ITAT Delhi ruling in ITO vs. Avirook Sen, where ex-gratia compensation paid voluntarily without employer obligation under service rules was held not to constitute section 17(3) income, the ITAT allowed the assessee's appeal. It held that the ex-gratia compensation received by the assessee was voluntary without employer obligation under service rules, and thus not taxable u/s 17(3). Consequently, the CIT(A)/NFAC order was set aside, directing the Assessing Officer to delete the addition.