TaxTMI 
TaxTMI 
Salary Taxation-Very urgent
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....alary Taxation-Very urgent<br> Query (Issue) Started By: - Dhirendra Srivastava Dated:- 24-11-2010 Last Reply Date:- 24-11-2010 Income Tax<br>Got 3 Replies<br>Income Tax<br>I had a question regarding Taxation of salary. suppose if an employee who is working in a company for 5 years now got a job in another company.He had worked for 6 months in the previous year with a salary of Rs. 100000 pm. No....
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....w his contract of employment require him to give either 3 months notice or 3 months salary in lieu of notice i.e Rs. 3 Lac. His new salary is Rs. 200000 pm. So if employee paid 3 months salary to the company, at the time of computation of income from salary can he claimed deduction of Rs. 300000.00 Reply By CA Rachit Agarwal: The Reply: There is no such deduction section for the sacrifice of t....
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....he salary. No doubt that sacrifice of salary has enabled the assessee to earn a higher income and offer the same for taxation, however there is no such deduction clause. General deduciton clause is only in case of Business/ Profession, Capital Gain, House Property and Income from other Sources. Reply By DEV KUMAR KOTHARI: The Reply: Dear Mr. Dhirendra Srivastava, It would be better if you giv....
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....e your own views and information which you have gathered on the subject matter for discussion. There seems no specific provision for such a deduction. However, by applying theory of diversion by way of overriding title a case can be made out that the amount paid to ex-employer in lieu of notice does not accrue as salary. Better course in order of priority can be as follows: I. If the new employe....
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....r pays to the ex-employer the amount of compensation as compensation for hiring employee of ex employer during notice period of employee. In this case salary from new employer will be reduced , there iwll be no accrual of salary to that extent. II. The ex employer deduct compensation and do not pay salary or other dues to that extent and deduction is made as reversal of salary or reduction of sa....
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....lary by treating 'no notice' as non compliance of terms of employment leading to reduction of salary due. III. A case can be made out for allowability of amount of compensation as business loss which arises as a commercial adventure is undertaken by leaving old job without giving due notice to ex employer and accepting new job at higher salary. however, such business loss shall not be set off aga....
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....inst salary , however, can be set off against other business/ professional or other income. Reply By B L Bhojwani: The Reply: "The total income has to be computed in accordance with the provisions of the Act. The computation of income under each of the five heads will have to be made independently and separately. There are specific rules of deduction and allowances under each head. No deduction....
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.... or adjustment on account of any expenditure can be made except as provided by the Act."_ Tuticorin Alkali Chemical and Fertilizers Ltd. v. CIT (1997) 227 ITR 172 (SC). In (2000) 3 SC 485 (K.V. Shivakumar Kumar Vs. Appropriate Authority), Hon'ble Supreme Court has held that equity or hardship are not relevant consideration for interpretation for taxing law. In view of the foregoing, the payment....
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.... of 3 month's salary by the employee to the Company in lieu of notice period is not an allowable deduction under the head "Income from salaries". No other head of income is applicable in this case.<br> Discussion Forum - Knowledge Sharing ....