Atul Shashikant Garbhe Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal heard the assessee’s appeal against the order dated 29.02.2024 passed by the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2019-20. The dispute concerned the taxability of ₹69,24,655 received by the assessee from Pfizer Healthcare India Pvt. Ltd. under its Financial Scheme after the assessee withdrew the claim of relief under Section 89 of the Income-tax Act, 1961 and alternatively contended that the amount constituted a capital receipt.
The assessee filed the return declaring total income of ₹82,35,540 and initially claimed relief under Section 89. During assessment proceedings, however, the assessee requested the Assessing Officer to permit withdrawal of the Section 89 claim and to treat the amount received from Pfizer as a voluntary ex-gratia payment constituting a capital receipt. The Assessing Officer rejected the request, holding that any compensation or severance received from an employer on termination of employment was taxable as “profits in lieu of salary” under Section 17(3). The Assessing Officer further observed that the judicial precedents relied upon by the assessee related to a period prior to the insertion of clause (iii) in Section 17(3) by the Finance Act, 2001, disallowed the relief under Section 89, initiated penalty proceedings under Section 270A, and completed the assessment. The CIT(A)/NFAC upheld the assessment.
