New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1290 - DELHI HIGH COURT

2015 (12) TMI 1290 - DELHI HIGH COURT - TMI - Compensation received from the German publisher - Honorarium receipt - Character of the receipt in the hands of the Assessee - whether a capital receipt not chargeable to tax under Income Tax Act? - Held that:- Certain facts of the present case are not disputed by the Revenue. First, that the Assessee was a journalist by profession and was appointed as the foreign correspondent in India of a German news magazine Der Spiegel. The second is that the Ge .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

enerating asset.

The Court concurs with the conclusion of the CIT (A) that the sum paid to the Assessee was "to compensate for the abrupt loss of source of income" and that the termination of contract had fatally injured the appellant's only source of income for the last 20 years." The mere fact that the Assessee was free to earn through other sources would not make a difference to this position. Recently this court in Khanna and Annadhanam v. Commissioner of Income Tax [2013 (1) TMI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t matters little that the assessee continues to be in receipt of income from its other similar operations. - Decided in favour of the Assessee - ITA 471/2003 - Dated:- 22-12-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr. Rohit Madan with Mr. Zoheb Hussain, Advocate For the Respondent : Mr. M.P. Rastogi and Mr. K.N. Ahuja, Advocates ORDER Dr. S. Muralidhar, J 1. This appeal is directed against the order dated 5th March 2003 passed by the Income Tax Appellate Tribunal ( ITAT ) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Either party could terminate the contract at the end of a calendar quarter by giving notice of six weeks. Der Speigel terminated the contract with effect from 1st December 1993 and paid compensation of DM 3,00,000 (Rs.53,82,000) for the association of the past 23 years and loss of work space. 3. In the original return the assessee claimed this amount as a revenue receipt but on revising the return, it was claimed to be a capital receipt. In the course of the assessment proceedings, the AO by me .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

due to the professional services rendered by you to the German Magazine. If so, the basis of the statement. v) Why this sum has been claimed as compensation? Was the German magazine legally bound to allow you to continuously render professional services to if? If so, what forced the German Magazine to discontinue your professional services?" 4. Apart from giving the explanations as sought, the Assessee also filed a copy of letter received from the German publisher with reference to the amou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

" 5. Reliance was also placed on a letter dated 28th December 1993, from the German publisher wherein it was stated as under: "We are transmitting DM 3 lacs to your bank account in New Delhi as sign off compensation for performance of authorship/professional services for a continuous period of 23 years." 6. The Assessing Officer (AO) by the order dated 20th February, 1995 negatived the plea that the aforementioned amount was a capital receipt. It was held that the termination of c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

who by order dated 4th July, 1997 held in favour of the Assessee. The CIT(A) observed inter alia as under: 3.1 The appellant was working exclusively for Der Spiegel in terms of the contract dated 14.12.1970 and the receipt of remuneration from Der Spiegel was the appellant's only source of income from January 1971 till the termination of the contract on 31.12.1993. Der Spiegel was under no obligation to pay any compensation to the appellant on terminated of the contract. However, compensatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s the remuneration which was largely dependent on published contribution was indetermined in the first instance. On the contrary, the termination of contract had fatally injured the appellant's only source of income for the last 20 years. The contract with Der Spiegel appointing the appellant as its foreign correspondent in India was a capital asset and the compensation received for the loss of asset constitutes the receipt of capital nature. The compensation of ₹ 53,82,000/- is theref .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a capital receipt not chargeable to tax under Income Tax Act?" 10. It is urged by Mr. Rohit Madan, learned standing counsel for the Revenue, that since the Assessee was free to work for other magazines, contribute articles and be remunerated therefor, the amount received from the Der Spiegel, consequent upon the termination of the contract, could only be treated as revenue income. He also made a reference to the decision in Kettlewell Bullen and Co. Ltd. v. CIT (1964)53 ITR 261 (SC). 11. Ce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was being paid "Due to the loss of his work place and in consideration of his long time association". These factors have a bearing on the character of the receipt in the hands of the Assessee. Indeed this was compensation for loss of an income-generating asset. 12. The Court concurs with the conclusion of the CIT (A) that the sum paid to the Assessee was "to compensate for the abrupt loss of source of income"" and that the termination of contract had fatally injured the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version