Case Law Details
Brief of the Case
Authority for Advance Rulings held In the case of Aberdeen Claims Administration Inc., USA and Aberdeen Asset Management Plc., UK that there is no doubt that the settlement amount is relatable to Satyam shares, i.e., if shares would not have been purchased the question of class action or right to sue would not have arisen. However, this does not mean that the settlement arrived with the approval of the US Court is to compensate business receipt of Aberdeen investors. The fact remains that the Aberdeen investors entered into a settlement agreement with Satyam considering the time, effort and costs involved in litigation and the agreement provided for a full, final and complete resolution of all claims asserted. The Aberdeen investors fully, finally and forever waived, released, discharged and dismissed each and every of their legal claims against Satyam and PwC. This was also agreed vice versa. It is clear, therefore, that the settlement amounts have been received not as part of business profit or to compensate the future income but as a result of surrender of the claim against Satyam and PwC. Surely, even in accordance with the principle of surrogatum such amount is not assessable as income because it does not replace any business income. In the light of above it is concluded that the settlement amount received by Aberdeen investors is not taxable under the provisions of the Income-tax Act.
Facts of the Case
The issues involved in all three applications relate to taxability of the settlement amount received from Satyam Computers Services Limited (Satyam) and Price Water House Coopers (PWC) under the provisions of the Income-tax Act, 1961.
Aberdeen Claims Administration Inc., USA
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