MAHADEO AHILAJI VIR,PUNE vs. ACIT, NFAC, PUNE

ITA 1532/PUN/2025Status: DisposedITAT Pune20 August 2025AY 2018-19Bench: Dr. MANISH BORAD (Accountant Member), SHRI VINAY BHAMORE (Judicial Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the ex-gratia payment was a voluntary payment made out of appreciation and not covered by Section 17(3)(iii) of the Income Tax Act. Following a previous decision with similar facts, the Tribunal ruled that the payment was a capital receipt and not liable to be taxed.

What were the facts?

The assessee received Rs. 42,21,420/- as ex-gratia payment from their former employer after cessation of employment. The employer stated this payment was voluntary, made out of appreciation, and not a legal obligation. The Assessing Officer treated this as 'profit in lieu of salary' under Section 17(3)(iii) of the Income Tax Act and made an addition to the assessee's income.

What were the issues?

Whether an ex-gratia payment received after cessation of employment, stated by the employer to be voluntary and not an obligation, is taxable as 'profit in lieu of salary' or is a capital receipt.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 144B,Section 142(2),Section 142(1),Section 17(3)(iii),Section 17,Section 15,Section 16,Section 10(10C)

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Income Tax Appellate Tribunal, SMC BENCH,

Before: Dr. MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Bhavesh Lodha &
For Respondent: Shri Harshit Bari, Addl
Hearing: 21.08.2025Pronounced: 29.08.2025

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

- This appeal at the instance of the assessee is directed against the order passed by Ld. CIT(A) NFAC, Delhi dated 24.05.2024 u/s 250 of the Income Tax Act, 1961 and is arising out of assessment order passed u/s 143(3) r.w.s. 144B dated 17.08.2021. 2. Registry has informed that there is a delay of 323 days in filing of this appeal. Affidavit alongwith application for condonation of delay has been filed. Main reason for delay is on account of non communication about the impugned

2 order by the consultant. It is stated that delay in filing the a

The order continues below.

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