Prasad Vijaykumar Kulkarni Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal heard the assessee’s appeal against the order dated 23.02.2024 passed by the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2019-20. The dispute concerned the taxability of an amount received from Pfizer Healthcare India Pvt. Ltd. under its Financial Scheme and the assessee’s alternative claim that the receipt constituted a capital receipt instead of profits in lieu of salary.
The assessee filed the return of income declaring total income of ₹66,05,280 and claimed deduction of ₹20,41,068 under Section 89 of the Income-tax Act, 1961. During assessment proceedings, however, the assessee sought to withdraw the claim under Section 89 and requested that the amount received from Pfizer be treated as a capital receipt on the ground that it represented voluntary ex-gratia payment and did not fall within the definition of profits in lieu of salary.
The Assessing Officer rejected the assessee’s contention. Referring to the Financial Scheme introduced by Pfizer, the Assessing Officer observed that the company had offered a voluntary retirement scheme providing an attractive financial package to employees opting for voluntary retirement. According to the Assessing Officer, the payment represented compensation connected with voluntary retirement and termination of employment and therefore fell within Section 17(3)(i). The Assessing Officer further held that the judicial precedents cited by the assessee were distinguishable on facts and completed the assessment by treating the amount of ₹20,41,068 as profits in lieu of salary. The CIT(A)/NFAC upheld the assessment.
