Case Law Details
During the year under consideration the assessee served with Reliance Communication for 39 days for the period 01.04.2009 to 09.05.2009 and received a total salary of Rs.1,64,636/-, out of which Rs.1,10,550/- was recovered as notice pay as per agreement with the employer. Therefore, the assessee declared salary income of Rs.54,086/- after deducting notice pay of Rs.1,10,550/-. Thereafter, the assessee joined in Sistema Shyam Teleservices Ltd where he served for a period from 18.05.2009 to 24.02.2010 and received a total salary of Rs.13,95,880/- out of which Rs.1,66,194/- was deducted as notice pay as per agreement with employer. Therefore, notice pay of total Rs.2,76,744/- was claimed in the return of income as deduction which was recovered from the salary by assessee’s previous employers as mentioned above. The Ld. CIT(A) was of the view that no such deduction is available under Section 16 of the Act and the salary income is taxable on due basis or on paid basis. After considering the facts as quoted above, we find that employers have made deduction from the salary which was paid to the assessee during the year under consideration because of leaving the services as per agreement made by the assessee and the respective employer. We find that this is a case of recovery of the salary which is already made to the assessee for which we have not to refer Section 16 of the Act as mentioned by the ld. CIT(A). It is pertinent to note that the assessee has actually received the salary from his previous employers after deducting the notice period as per the job agreement with them. Therefore, in our considered view, the actual salary received by the assessee is only taxable.
FULL TEXT OF ITAT ORDER
This appeal by the assessee is directed against the order of the Commissioner of Income-Tax (Appeals)-XXI, Ahmedabad dated 14.08.2013 for Assessment Year 2010-11.
2. The grounds of appeal raised by the assessee read as under:-
1. The learned C.I.T. (Appeals) has erred in confirming the disallowance of Rs. 2,76,744/- on the ground that the amount received as Notice pay is liable to be taxed under the head “Salary” u/s. 16 of the IT. Act. It is submitted that the amounts received of Rs. 1,64,636/- and Rs. 1,10,550/- both as Notice pay do not form part of the Salary Income as they are capital receipts. It is submitted that on the basis of fact and decisions by Appellate Authorities, the amount received as Notice pay of Rs. 2,76,744/- be not taxed as Salary Income and the addition made be deleted.
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I had worked in organization for 11 days & left the company without serving notice period. Company recovered notice pay 62000 but in form 16 I see total amount including 11 day payment & INR 62000 of recovery pay. Can we mention deduction of INR 62000 while filing IT return. If so where & how should we mention the deduction.
If not so, what can be the action required from my side? Please suggest.
Hi Sir, i have one confusion. Please reply proper comment.
Confusion is: I had paid Rs.62220 as notice period and paid month was october 2018. But my period of this company was 26th feb 2017(last day). But my full and final settlement date was 30th april and i had paid amount in october 2018. So i have applied this amount in this financial year. Please suggest me.
In case employee had worked during notice period , one was eligble to get salary for total period and no deduction by employer. In fact payment of notice period by employee is towards salary payable by employer during notice period. Therefore it is also recovery of salary.
This judgement is to tax the actual salary received by the assessee.
If the case was that the assessee received the salary in full and then paid the recovery amount, the complete received salary would be taxable (not excluding the recovery amount) ?