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2024 (4) TMI 548 - AT - Income TaxProfits in lieu of salary u/s 17(3)(i) - payment received by the assessee as lump sum amount after his termination from service and sum received for the purchase of new car - assessee has argued that he received the aforesaid amount as lump sum amount as a settlement out of court with the employer (INX Media) of the assessee and voluntary settled the case as the reputation of the assessee was diminished due to extreme harassment and ill treatment caused by the employer HELD THAT:- Hon’ble Madras High Court in C.N.Badami [1997 (10) TMI 17 - MADRAS HIGH COURT] has held that the amount received for encashment of leave salary would be a profit in lieu of salary and taxable under “voluntary Separation Programme”. The Hon’ble Madras High Court in P. Arunachalam [1998 (2) TMI 42 - MADRAS HIGH COURT] also followed the dictum of Badami (supra). However the perusal of the aforesaid citation shows that the Hon’ble Madras High Court held as above as there was an existing agreement, whereas there was no such agreement between assessee and his employer in the facts of the present appeal, hence, the facts of the present case are easily distinguishable. CIT(A) has rightly held that the receipt of the aforesaid amount, being on account of out of court settlement and on account of the value of perquisite, deserved to be deleted and were so rightly deleted. 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). Decided against revenue.
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