Lump sum amount received from ex-husband as alimony is not taxable

This case shows the need to differentiate in capital and income. An amount paid by husband or ex-husband to wife or ex-wife, is per say a payment on account of personal expenses and are capital expenses. The receipt is capital receipt. Under Constitution of India tax can be impsoed only on income and not on capital receipt. Payment made on monthly basis or on lump sum bais both bear the same character. The amount is in nature of gift or in consideration of divorce. Both way these are capital receipts.
Therefore, the amounts which are in nature of capital cannot be subject matter of taxation under IT Act.

Capital receipts cannot be taxed as income under the Indian Constitution:
In the List I – Union List under the VII-SCHEDULE in terms of the Article 246 of the Constitution of India we find the following entries in relation to tax on income which the UOI can impose:
82. Taxes on income other than agricultural income.
85. Corporation tax.
We do not find definition of income however we find the following definitions in the Article 366 in The Constitution Of India 1949
366. Definition In this Constitution, unless the context otherwise requires, the following expressions have, the meanings hereby respectively assigned to them, that is to say
(1) agricultural income means agricultural income as defined for the purposes of the enactments relating to Indian income tax;
(6) “corporation tax” means any tax on income, so far as that tax is payable by companies and is a
tax in the case of which the following conditions are fulfilled:—
(a) that it is not chargeable in respect of agricultural income;
(b) that no deduction in respect of the tax paid by companies is, by any enactments which may apply to the tax, authorised to be made from dividends payable by the companies to individuals;
(c) that no provision exists for taking the tax so paid into account in computing for the purposes of Indian income-tax the total income of individuals receiving such dividends, or in computing the Indian income-tax payable by, or
refundable to, such individuals;
(28) taxation includes the imposition of any tax or impost, whether general or local or special, and tax shall be construed accordingly;
(29) tax on income includes a tax in the nature of an excess profits tax;
Income -tax or Corporation tax can be imposed only on income:
From above entries and definitions we can say that the UOI or The central Government of India can impose or levy a tax or impost on income other than agricultural income. And tax on income includes tax in the nature of an excess profits tax.
Any capital receipt is not in nature of income or excess profit, therefore the UOI is not empowered to impose tax on capital receipts of any assessee by way of tax on income, tax on excess profits or by way of corporation tax.
Subsidies are not income:
Subsidies are not income or excess profit, therefore a tax in nature of tax on income or tax on excess profit cannot be imposed as per the provisions of the Constitution of India.
Some provisions of Income-tax Act which imposes tax on capital receipts may be ultravirse the Constitution of India- and need to be judicially examined on proper challenge:
We find that there are many provisions under which capital receipts are treated as income. Now-a-days tendency is to add clauses and sub-clauses or make new provisions to treat any thing as income. It can be said that by expanding definitions, artificial and un-natural meanings are assigned or scope is enlarged in artificial and un-natural manner. For example, provision to treat contributions of employees towards provident funds, and other funds which are liability of employer and funds are held under trust is deemed income. This is ultravirse, however, as per information of the author, this has not be challenged as ultravirse.
If properly challenged, the provisions of clauses (iia), (x) , (xi),(xiii), (xiv) (xv), (xvi) of sub-section 24 of section 2 of the Income-tax Act, 1961 may be held as ultra virse the Constitution of India and the Income-tax Act itself. Because these clauses deems capital receipts as income of assessee. Such treatment is not within the power of UOI. These sums cannot be called income. or excess profit on which income-tax can be levied.
Similarly some of corresponding provisions found in section 28, 41 and 56 can also be beyond the power to tax income.

Unless a receipt is in naaature of income, it cannot be taxed as income. For example an unexplained cash credit can be considered as income by presumption. but when a cash credit in nature of loan, gift, or any other receipt on capital account is proved to be a capital receipt it cannot be taxed as income.
In the case before Tribunal, the nature and source was proved. It was not case of revenue that money belonged to assessee, therefore, even monthly payments must be regarded capital receipt.
U/s 56 also the sum should be in nature of ‘income’. a capital receipt should not fall u/s 56 by presumption of income.
Constitutional validity of such deeming provisions need to be challenged.