SMT. SWATI SAMEER JOSHI ,MUMBAI vs. INCOME TAX OFFICE WARD 34(3)(4), MUMBAI

ITA 8821/MUM/2025Status: DisposedITAT Mumbai30 April 2026AY 2017-188 pages
AI SummaryAllowed

What were the facts?

The assessee received amounts as gratuity, leave encashment, conveyance, commuted pension, and compensation due to a mutual exit agreement with her employer, a bank that closed its Indian operations. The AO disallowed exemption for commuted pension and compensation, treating them as salary income.

What did the Tribunal hold?

The Tribunal held that voluntary payments made by an employer in the nature of compensation on termination of employment, especially when arising from a settlement and not from a legal obligation, do not fall under 'profits in lieu of salary' as defined in Section 17(3) of the Act. Therefore, such payments are not taxable as salary.

What were the issues?

Whether compensation received by an employee due to termination of employment, arising from a mutual exit agreement, is taxable as 'profits in lieu of salary' under Section 17(3) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 10(10A),Section 10(10B),Section 17(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI ARUN KHODPIA

For Appellant: Shri Sameer Dalal, Ld. A.R
For Respondent: Shri Aditya Rai, Ld. Sr. D.R
Hearing: 07.04.2026Pronounced: 30.04.2026

Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 21.11.2025, impugned herein, passed by the Ld.

Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18. 2. In the instant case, the Assessee was an employee of Royal Bank of Scotland PLS Bank (in short, ‘bank’) since 01.01.1998. Somehow, the bank has closed down its operation in India w.e.f. 19.01.2016 and entered into a ‘mutual exit agreement’ executed between the bank and its employee on d

The order continues below.

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