Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2010 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (4) TMI 130 - HC - Income TaxProfit in lieu of salary – Section 17(3) – scope of Section 17(3) - exhaustive definition or only illustrative - After his retirement, assessee took up the profession of consultancy - The assessee filed a return of income of Rs.32,13,540/- and also claimed exemption of Rs.22,00,000/- being non-compete fee of a capital nature. – assessee stated that the amount of Rs.22,00,000/- received from his former employer was exempted and the same was not taxable. Held that: it is held that the payment of Rs.27,50,000 received by the assessee being solely as compensation for his agreement not to take up any competitive employment/assignment in future, the same, as rightly held by the Commissioner of Income-tax (Appeals) and the Tribunal, cannot be added for the purpose of Income tax for the year 2001-2002 - 17(3)(ii), which was inserted by the Finance Act, 2002 is only prospective in nature and not retrospective - Whenever enlarging the scope of existing provision and also including the particular transaction as income, the provision always comes into effect prospectively unless specifically stated that it operates retrospectively - if the object of the payment is unrelated to the relation between the employer and employee, it would not fall within the expression "profit in lieu of salary" under Section 17(3)(i) of the Act. - As stated above, unless a benefit/receipt is made taxable, it cannot be regarded as "income". This is an important principle of taxation under the 1961 Act. Applying the above principle to the insertion of sub-clause (iiia) in section 17(2) one finds that for the first time with effect from April 1, 2000, the word "cost" stood explained to mean the amount actually paid for acquiring specified securities and where no money had been paid, the cost was required to be taken as nil. TDS deducted by the payer can not make non taxable income as taxable income - The argument does not hold good on the ground that the employer of the assessee had deducted the tax at source only on the advice of the tax consultant and also on abundant caution. The assesee also paid advance tax only at the instance of his counsel. Concession or consent certainly does not confer any jurisdiction on revenue to assess it. Therefore, the said factors do not help the revenue. In these circumstances, we are of the view that the amount received by the assessee is only a capital receipt and the same is not taxable
|