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2023 (2) TMI 558 - AT - Income TaxCapital gain or salary received - Recognizing the compensation received by the assessee as the share holding of the company - AO held that the amounts received by the assessee is profits in lieu of salary as defined in Section 17(3)(iii) - CIT(A) considering the 'foregoing of right to receive equity share’ by the assessee was the same as giving up the capital asset of Share” - CIT(A) deleted the addition holding that the assessee was employed earlier by M/s Tek Travels Pvt. Ltd. (TTPL) and entitled to yearly compensation plus 3% ESOP - HELD THAT:- We find that the one reason of the settlement was allotment of shares and as per the employment agreement, the shares have to be allotted @ 7500 for each year of completed service. And since, the assessee has completed only two completed years of service, for the purpose of taxation. Keeping in view the jurisprudence laid down as in the cases of CIT Vs. J. Dalmia [1984 (5) TMI 32 - DELHI HIGH COURT], Baroda Cement & Chemicals Ltd. [1985 (12) TMI 55 - GUJARAT HIGH COURT], Bhojison Infrastructure (P.) Ltd. [2018 (9) TMI 1239 - ITAT AHMEDABAD], and ACIT Vs. Jackie Shroff [2018 (9) TMI 1006 - ITAT MUMBAI] with regard to taxation of amount received as compensation for giving up the “Right to sue” and also keeping in view of the principles of real income, eligible income, receivable income and the accounting principles thereof as laid down above, we hold that the amount received quivalent to the pro-rata value of eligible shares of 15,000 out of offered shares of 50,000 be treated as capital gains u/s 48 and the remaining amount received by the assessee from the former employee be treated as per the provisions of Section 17(3)(iii). Appeal of the Revenue is partly allowed.
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