JAYAKRISHNAN GOPALAKRISHNAN,COCHIN vs. ITO, CORPORATE WARD 2(5), COCHIN

ITA 895/COCH/2024Status: DisposedITAT Cochin27 March 2025AY 2020-21Bench: SHRI INTURI RAMA RAO (Accountant Member)4 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the ex-gratia payment received by the appellant from the former employer on termination of service clearly falls within the definition of "profits in lieu of salary" as per Section 17(3) of the Income Tax Act, 1961, and is therefore taxable. The decision of the Delhi High Court relied upon by the appellant was deemed inapplicable as it predated the insertion of sub-section (3) to Section 17.

What were the facts?

The appellant received an ex-gratia payment of Rs. 23,75,000 upon termination of service, initially seeking exemption for Rs. 5,00,000 under Section 10(10C). The Assessing Officer (AO) taxed the entire payment under Section 143(3) read with Section 144B, which was upheld by the CIT(A), leading to the current appeal before the Tribunal.

What were the issues?

Whether an ex-gratia payment received on termination of service is a capital receipt exempt from tax or taxable as "profits in lieu of salary" under Section 17(3) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 10(10C),Section 143(3),Section 144B,Section 17(3),Section 15,Section 16,Section 10,Section 10A,Section 10B,Section 11,Section 12,Section 13,Section 13A,Section 10D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM

For Appellant: Shri P.T. Joy, CA
For Respondent: Smt. Leena Lal, Sr. D.R
Hearing: 12.03.2025Pronounced: 27.03.2025

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 30.08.2024 for Assessment Year (AY) 2020-21. 2. Brief facts of the case are that the appellant is an individual deriving salary income. The return of income for AY 2020-21 was filed on 30.12.2020 and the same was revised on 21.01.2021 by seeking exemption on ex-gratia payment u/s. 10(10C) of the Income Tax Act, 1961 (the Act) of Rs. 5,00,000/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Corporate Ward-

2 Jayakrishnan Gopalakrishnan 2(5), Cochin (hereinafter called "the AO") vide order dated 25.12.2023 passed u/s. 143(3) r.w.s. 144B of the A

The order continues below.

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