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2018 (11) TMI 1005 - AT - Income TaxNature of income - Severance compensation received - AO held that the compensation in question is taxable as income - whether compensation in question can also be taxed as capital gains u/s 45 - contentions of the assessee rejected that the compensation in question is a capital receipt and hence cannot be regarded as income under the inclusive definition of the term “income” under the “ Act” - whether the ITAT can examine the issue whether the receipt in question is taxable u/s 28(ii)(a) or alternatively u/s 45 or under any other section of the Act either considered or not considered by AO, when the AO has based his assessment ultimately on Section 56(2)(vii)? - Held that:- AO in this case has examined various provisions of the Act under which he was of the opinion that the receipt in question is taxable. He sought to protect the interest of revenue and to assess the receipt in question under the head “income from business “ as well as under the head “income from capital gains”. After holding that the receipt in question is taxable under those heads, he ultimately held that the receipt is taxable under the head “income from other sources” for the reasons as given in his order. The law, in our view, does not place limitations as to the manner in which the AO proposed to tax particular receipt. To protect the interest of revenue, in our view, it is open for the assessing officer to bring to tax receipt under various sections when he is in doubt. Alternative/Multiple reasoning by the assessing authority while arriving at a conclusion that the receipt in taxable is permissible. We are of the considered opinion that we have the power to examine the action of the Assessing Officer in holding that, the receipt in question can also be brought to tax u/s 28(ii)(a) of the Act and u/s 45 of the Act. There is no bar under the statute to the powers of the Tribunal to remand the matter back to the file of the Assessing Officer or to the file of the ld. CIT(A) with or without directions. It is not the case of the Assessing Officer that the assessee is managing the whole of the affairs of GI. Its his case that the assessee has a significant role which is of some substance or worth in the affairs of the company because of his special rights by virtue of the share holder agreement and hence it is a case where the assessee is managing substantially the whole of the affairs of the Indian company. This aspect has to be examined by the CIT(A). To come to an appropriate conclusion on the matter, further enquiries may have to be conducted with P&G Group as well as with the assessee, as to why the assessee was only paid the entire severance compensation of ₹ 200 Crores. The assessee submitted in the written arguments that he is exclusively paid this compensation and no other person in the group has any right for the compensation. The facts thrown up during the course of negotiations between the groups may throw light on this issue. It has also to be brought on record as to what were the existing rights and privileges of the assessee, as on the date of entering into the share holder agreement which were retained by him till the date of termination of these rights. CIT(A), as passed a cryptic order, we set aside this issue to the file CIT(A), for fresh adjudication, in accordance with law after giving the assessee adequate opportunity of being heard. While doing so, the CIT(A) may, if he thinks fir or necessary call for a remand report, so as to bring all the facts of the issue on record. Appeal of the assessee is allowed for statistical purposes.
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