ITAT, DELHI BENCH ‘E’ NEW DELHI ADIT (Int’l Taxation) v. Ravinder Behl ITA No. 3365/Del/2004 March 31, 2009

Assessment of compensation received by an employee in foreign currency from his employer for loss of his employment



Compensation for loss of employment is a capital receipt under the general law, but clause (i) of section 17(3) of the Income-tax Act, 1961 brings to charge as profits in lieu of salary any compensation due or received from an employer or former employer at or in connection with the termination of his employment or modification of its terms and condition relating thereto; therefore, compensation received by the assessee-employee in foreign currency from his employer for termination of his employment is chargeable to tax as profits in lieu of salary under section 17(3)(i).