https://www.taxtmi.com/caselaws?id=779287 A voluntary ex gratia payment made by an employer on closure of a unit and cessation of employment, without any contractual or statutory obligation under the service terms, is treated as outside compensation under section 17(3) of the Income-tax Act, 1961. The Tribunal's reasoning, supported by earlier decisions, was that such payment does not acquire the character of taxable compensation merely because employment has ended. The disallowance based on CBDT Circular No. 573 dated 21.08.1990 was not sustained on the facts, and the ex gratia amount was treated as not taxable under the compensation provision. en-us Thu, 04 Sep 2025 00:00:00 +0530 Fri, 03 Oct 2025 08:30:37 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=779287 A voluntary ex gratia payment made by an employer on closure of a unit and cessation of employment, without any contractual or statutory obligation under the service terms, is treated as outside compensation under section 17(3) of the Income-tax Act, 1961. The Tribunal's reasoning, supported by earlier decisions, was that such payment does not acquire the character of taxable compensation merely because employment has ended. The disallowance based on CBDT Circular No. 573 dated 21.08.1990 was not sustained on the facts, and the ex gratia amount was treated as not taxable under the compensation provision. Case-Laws Income Tax Thu, 04 Sep 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=779287