Case Law Details
Sushmita Sen Vs ACIT (ITAT Mumbai)
Conclusion: Amount received by SushmitaSen from Coca Cola Company in connection with settlement of a sexual harassment case was not liable to tax as the compensation received could not be termed as any benefit, perquisites arising to the assessee out of the exercise of profession.
Held: In the instant case, assessee-actress, received Rs. 145 Lacs from M/s Coca-Cola India Limited but offered only a part of the same i.e. Rs.50 Lacs to tax and claimed the balance Rs.95 Lacs to be capital receipts in nature in view of the fact that the same represented compensation received by the assessee towards damages caused to assessee’s reputation however, AO subjected the whole amount to tax. It was held only an amount of Rs.50 Lacs was due to the assessee as per the terms of the contract in case of default by CCIL and nothing more.The balance amount of Rs.95 Lacs was stated to be received for loss of reputation etc. and therefore, being capital in nature, claimed to be not taxable as the said compensation did not accrue / arise out of exercise of profession by assessee and could not be construed to be the income of the assessee or profits and gains of profession within the meaning of Section 2(24) and Section 28.
FULL TEXT OF THE ITAT JUDGMENT
1. Aforesaid appeals by assessee for Assessment Year [in short referred to as ‘AY’] 2004-05 contest the orders of Ld. first appellate authority qua confirmation of certain addition as well as penalty u/s 271 (1)(c). Since the penalty arises out of quantum addition, both the appeals are being disposed-off by way of this common order for the sake of convenience and brevity. First we take up quantum appeal ITA No. 4352/Mum/2015 which contest the order of Ld. Commissioner of Income-Tax (Appeals)-4, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-4/Tr-26/Appeal-(3)/ACIT. 11(1)/2014-15 dated 24/03/2015 by raising following effective grounds of appeal:-
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