TMI Blog2023 (2) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as correct in not appreciating the fact that the right to forego equity shares did not exist till the company agreed on the terms of settlement with the share holders. 4. Whether on the facts and circumstances of case and in law, the Ld. CIT(A) was correct in not appreciating the fact that the capital asset of share can be said to be acquired only on 23.01.2014 when the settlement was reached between company and the assessee. Hence the capital asset was held for less than a year and is a Short Term Capital Assest and thus gains arising out of the transaction are a STCG. 3. The assessee is an individual derived income from salary and capital gains during the year. It was submitted before the Assessing Authority that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y petitions filed against the second party within 5 business days of the receipt of payment of the settlement amount. 5. The AO held that the fact, that these shares have not been registered in the name of the assessee was never in dispute. The assessee has only surrendered rights in the shares as the shares were never registered in the name of the assessee and hence the AO held that the amounts received as per the settlement cannot be treated as capital gains. The AO has also held that the payer has treated the amount as salary and also deducted TDS as per the provisions of the Act. Under these circumstances, the AO held that the amounts received by the assessee is profits in lieu of salary as defined in Section 17(3)(iii). 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; (ii) any payment (other than any payment referred to in clause (10), clause (10A), clause (10B), clause (11), clause (12), clause (13) or clause (13A) of section 10), due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Explanation.-For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from other sources should be the same in the case of the instant assessee. But there are circumstances in which different sources are to be treated appropriately as per the reasons of arising of such source of income. The fundamental point, of course, is that taxation exist for different reasons for different sources. The variation between the amounts received out of the one composite settlement agreement has been duly examined and found that this amount consists of two different part. The relationship between the amounts received and the shares accrued has been duly examined. There could be different reasons for an agreement for the interested parties, at such time, the taxation principles have to be precisely based on the nature of income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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