PADMA RAO,DELHI vs. ITO, WARD 61(1), DELHI

ITA 2759/DEL/2023Status: DisposedITAT Delhi30 January 2024AY 2020-21Bench: SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, SHRI YOGESH KUMAR U.S (Judicial Member)18 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 28(ii)(e) is not applicable as the compensation was received due to non-renewal of a contract, not termination, and the term 'business' in the section does not include 'profession'. Similarly, Section 56(2)(xi) was also found not applicable for the same reasons.

What were the facts?

The assessee received Rs. 3 crores as compensation from M/s Spiegel Verlag. The Assessing Officer treated this compensation as taxable under Section 28(ii)(e) or alternatively under Section 56(2)(xi) of the Income Tax Act, 1961, making an addition to the assessee's income. The assessee contended that the compensation was a capital receipt and not taxable.

What were the issues?

Whether compensation received due to non-renewal of a contract is taxable under Section 28(ii)(e) or Section 56(2)(xi) of the Income Tax Act, 1961, and whether 'business' in Section 28(ii)(e) includes 'profession'.

Which sections of the Income-tax Act were involved?

Section 28(ii)(e), Section 56(2)(xi)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI YOGESH KUMAR U.S

For Appellant: Shri Ajay Vohra, Sr. Adv, Ms. Saumya Meehrotra, Adv, Shri Vivek Sharma, Adv
For Respondent: Shri V. K Dubey, Sr. DR
Hearing: 16.01.2024Pronounced: 30.01.2024

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:

- This appeal by the assessee is preferred against the order dated

07.08.

2023 by NFAC, Delhi pertaining to A.Y. 2020-21. 2. Though the assessee has raised as many as 27 grounds of appeal,

but the substantive grievance is two-fold and the same read as under:

“3. The impugned order has erred both on facts and in law, in making an addition of Rs. 3,00,00,000/- u/s 28(ii)(e) of the Act. The impugned order has wrongly applied section 28(ii)(e) of the Act in respect of the amount received which is a capital receipt.

17.

That the 'either-or' approach adopted against the Appellant by the Income Tax Department [Le. invoc

The order continues below.

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