Tax Dispute Resolved: Ex-Gratia Payment Deemed Capital Receipt, Not Taxable Under Section 17(3)

ITAT adjudicated a tax dispute concerning compensation receipt upon employment termination. The tribunal determined that ex-gratia payment constitutes a capital receipt, thus not taxable under section 17(3). Relying on precedential cases involving similar compensation scenarios, the tribunal ruled in favor of the assessee. The ex-gratia amount was characterized as capital in nature, consequently excluding it from taxable income. The appellate tribunal allowed the assessee's appeal, effectively exempting the compensation from tax liability and establishing a consistent interpretative approach for similar compensation-related tax assessments. .....

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