Death compensation taxable? IT dept seeks time to respond to Gujarat HC

The Revenue Tax Division on Monday sought time to answer a discover from the Gujarat Excessive Court docket on the tax demand on loss of life compensation acquired by the following of kin of a girl killed within the 1986 Pan Am Flight 73 hijacking incident.

The IT division has sought time to answer the courtroom’s question on whether or not such compensation quantity awarded by a international courtroom will be handled as “earnings” and in that case, beneath which provisions of the regulation it intends to levy the tax.

The matter pertains to a petition filed by Kalpesh Babulal Dalal, whose spouse was amongst these killed through the hijacking of the Pan Am flight in 1986 whereas touring from Bombay to New York.

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Following his spouse’s loss of life, Dalal had acquired practically Rs 18.60 crore in a compensation ruling by a courtroom in Columbia, New York. He had acquired the compensation in three tranches of Rs 8.11 crore in FY 2012-13, Rs 34.24 lakh in FY 2013-14, and Rs 10.15 crore in FY 2014-15.

Nevertheless, the IT division has sought to reopen the evaluation for monetary years 2013-14 and 2014-15 claiming the compensation quantity was not proven within the IT returns filed by Dalal. In January, Dalal moved the Gujarat HC following a discover from the IT division final 12 months difficult the taxman’s transfer to impose earnings tax for the compensation quantity.

The petitioner has contended that the compensation quantity shouldn’t be an earnings and therefore, can’t be taxed. In the course of the course of the listening to, Dalal additionally identified that the investigation wing of the IT division had issued a summons in 2014 to which he had responded. The petitioner mentioned he had additionally responded to all queries pertaining to financial institution transactions.

Terling it a “distinctive” case, a division bench comprising Justices JB Pardiwala and Nisha Thakore had, on January 24, issued a discover to the IT division to answer the contentions raised by the petitioner.

The matter will subsequent be taken up on March 14.

Trupti Dalal was touring on the Pan Am flight together with her 21-member dance troupe and her 11-year-old son for a cultural efficiency. Twenty passengers, together with two Individuals and 13 Indians had been killed, after the Mumbai-New York flight with 360 passengers on board was hijacked by 4 Palestinian militants on September 5, 1986, from Karachi in Pakistan.

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