Severance Compensation of Rs.15.5 Lakhs Deemed Capital Receipt, not Taxable u/s 17(3) of Income Tax Act: ITAT deletes AO Addition [Read Order]
The tribunal stated that recent amendments on employment termination compensation were not applicable, as they took effect from AY 2019-20. It then set aside the CIT(A)’s order and deleted the AO’s addition, confirming the severance compensation as non-taxable.
The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)ruled that the severance compensation of Rs. 15.5 lakhs received by the appellant-assessee was a capital receipt, not taxable under Section 17(3) of the Income Tax Act,1961,and deleted the addition made by the Assessing Officer (AO),emphasizing that the compensation was due to redundancy and unrelated to past services….
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