March 2010
Capital or revenue receipt: S. 17(3)(iii) of I. T. Act, 1961: A. Ys. 2003-04 and 2004-05: Amount received by way of compensation for denial of job on basis of gender discrimination: Not in nature of “profit in lieu of salary”: Capital receipt:
By K. B. Bhujle | Advocate
New Page 1
Reported
:
53 Capital or revenue receipt: S. 17(3)(iii) of I. T. Act,
1961: A. Ys. 2003-04 and 2004-05: Amount received by way of compensation for
denial of job on basis of gender discrimination: Not in nature of “profit in
lieu of salary”: Capital receipt:
[CIT
Vs. Smt. Rani Shankar Mishra; 320 ITR 542 (Del)]
The assessee applied for a job in the Voice of America which
is a state owned broadcasting agency. The assessee was denied a job on the basis
of gender discrimination. On a class action suit filed on behalf of the women
who had been denied employment, a proposal was made by the Government of United
States to settle the entire class action. The settlement offer was accepted and
a consent decree was drawn up awarding compensation of $ 508 million to the
persons who were not offered the job. The Assessing Officer made addition to the
income of the assessee in respect of the compensation amount and interest
received by the assessee treating it as “profit in lieu of salary” u/s.
17(3)(iii) of the Income-tax Act, 1961. The Tribunal deleted the addition and
held that the amount received by the assessee was in the nature of capital
receipt since the amount was received by the assessee by way of compensation in
respect of job not offered to the assessee on the basis of gender
discrimination.
On appeal by the Revenue, the Delhi High Court upheld the
decision of the Tribunal and held as under:
“The Tribunal was justified in holding that the amount
received by way of compensation for not being offered the job on the basis of
gender discrimination was a capital receipt.”
