Akash Poddar Vs ACIT (Delhi High Court)
Delhi HC held that the settlement consideration as received was liable to be recognized as capital gains and the same couldn’t possibly or justifiably be placed in the category of ‘profit in lieu of salary’.
Facts- The appellant-assessee impugns the order of ITAT on the question of law that whether in the facts and circumstances of the case, the Tribunal erred in law in artificially and illegally bifurcating the treatment to be accorded to the composite amount of Rs.3.03 crores received by the appellant in pursuance of a settlement for relinquishment of rights and interests in the shares of Tek Travels Pvt. Ltd. holding that part amount is to be treated as capital gains under section 48, and the remaining amount is to be treated as income from salary under section 17(3)(iii) of the Act.
Conclusion- The fundamental mistake which the Tribunal committed was failing to bear in mind the distinction between a „perquisite‟ and „profits in lieu of salary‟ and both of which are dealt with separately in Section 17. „Profits in lieu of salary‟, which is spoken of in Section 17(3), deals with compensation received by an assessee from his employer or former employer in connection with the termination of his employment or on a mod-ification of terms and conditions of service. However, the Tribunal has fundamentally erred in ig-noring the indubitable position of the employment of the assessee having been brought to an end on 24 August 2010 itself and thus before the action came to be even laid or instituted before the CLB.
