TaxTMI 
TaxTMI 
2025 (9) TMI 1824
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....ribunals & High Courts. 2. The Learned CIT(A) has erred in confirming the decision of AO treating the amounts of Rs. 27,31,026/- as Income from Other Source u/s. 56(2)(xi) & erred in denying the relief u/s 89 & has thereby erred on Facts & Law by confirming the Assessment as completed by the AO. 3. The Learned CIT(A) has erred by not considering the claim of the Appellant, of the said amounts being Capital Receipts, because the same was received only due to premature cessation of his employment & permanent loss of Source of Income. The CIT(A) has failed to attend & adjudicate the claim & has brought nothing on record to refute the claim of Capital Receipts. 4. The Learned CIT(A) has erred by not considering the jurisdictional & binding Judgement of Pune ITAT, Mumbai ITAT & other Judgment of various High Courts & of Hon'ble Supreme Court. The Learned CIT(A) has erred in not applying all the legal citations. The Learned CIT(A) was bound to consider the squarely applicable Judgements of Pune & Mumbai ITAT on the principles of binding precedence." 3. Brief facts of the case are that the appellant is an Individual and have filed his Return of Income dt.23.0....
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.... be paid as follows:- 1. The employee would be paid compensation equivalent to the lesser or the following, subject to a minimum of (six) month' wages drawn by the employee. 2. 75 (seventy-five) days' wages for every year of service with the company; 3. Wages for the remaining months of service with the company till the attainment of retirement age of 58 years. 4. In addition, the employee would also be entitled to receive payment in lieu of notice amounting to 90 days of month gross salary ("Notice Pay"). The amount paid, as above, shall be referred to as "Compensation". In addition to the above compensation, there were other incentives in the scheme namely, Early Bird Incentive and Group incentives encouraging large number of the employees to participate together in the scheme. The appellant opted for the scheme and received total compensation of Rs.53,34,390/-. In the return of income filed, the appellant has accepted the compensation received as income. The only contention of the appellant before the AO was that since the compensation is in the nature of salary received in advance, deduction u/s. 89(1) of Rs. 12,80,0....
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....l referred supra by the assessee. 7. We have heard the rival submissions and perused the orders of the authorities below and orders of the different benches of the Tribunal on this issue. We find that the issue in question is squarely covered by the orders of the different benches of the Tribunal. The Pune bench of Tribunal in the case of ITA No.863/PUN/2024 dated 17.09.2024, SMC-Pune - Atul Shashikant Garbhe Vz ITO, Ward-1(1), Aurangabad has held as under: 6. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find subsequent to the hearing of this appeal, another appeal under identical facts and circumstances has been decided by us in the case of Ashok Raghunathrao Kulkarni vs. ITO vide ITA No.117/PUN/2024, order dated 12.08.2024 wherein the amount received from Pfizer company as ex-gratia was held to be not taxable. The relevant observations of the Tribunal from para 23 onwards read as under: "23. We have heard the rival arguments made by both the sides, perused the orders of the....
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....uring unit was a capital receipt, not subject to tax. The assessee has also placed reliance on various case laws, in support of his above claim, and court has held as under "The amounts received were due to loss of employment & not recurring in nature & are not paid in lieu of any salary hence it does not come under the preview of sec. 17(3)(i) as amount of compensation. The said amounts have not been paid against any services of the assessee. Hence the same is not compensation as contemplated under the provisions of sec. 17(3)(i)." As the various courts have allowed the claim that the amount received at the time of cessation of his employment due to closure of the manufacturing unit as capital receipt during assessment proceedings in the cases referred by the assessee, the AO's has duly accepted the above claims of the respective assessee, which are very similar cases as that of the assessee's instant case. Hence, the reopened assessment proceedings in the case of the assessee, is hereby proposed to be completed by accepting the income returned by the assessee in response to 148." 25. In the remaining cases also, the respective AOs have treated such compensation as ca....
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....rring nature was in the circumstances not necessary. We, hence, do not express any opinion on it. 7. The question of law referred to us in this case, namely : "Whether, on the facts and in the circumstances of the case, the amount of Rs. 24,933 received by the assessee could be treated as income under the charging section or under the section dealing with the computation of income of the assessee ?" 8. is answered in the negative, in favour of the assessee and against the Department." 27. We find the Delhi Bench of the Tribunal in the case of ITO vs. Avirook Sen (supra) at para 12 of the order has observed as under: "12. As the payment of ex-gratia compensation was voluntary in nature without there being any obligation on the part of employer to pay further amount to assessee in terms of any service rule. it would not amount to compensation in terms of section 17(3)(i) of the Act. The impugned addition was rightly deleted by the Ld. CIT(A). The aforesaid point is accordingly determined against the revenue department. The appeal is accordingly not sustainable as we don't find any error of law or fact in the impugned order passed by Ld. CIT(A).....