| Case ID |
2ec7c4e8-e9c4-473a-a12f-e9c7487628d8 |
| Body |
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| Case Number |
I.T.A. No. 1154 of 1961-62 |
| Decision Date |
Oct 31, 1963 |
| Hearing Date |
|
| Decision |
The appeal arose from the assessment year 1960-61, where it was determined that the payment of Rs. 12,000 received by Mr. H was compensation for loss of employment and not remuneration for past services. The Income-tax Officer had initially added this amount to Mr. H's total income, presuming it was remuneration. However, the Appellate Assistant Commissioner found that the payment was indeed compensation for loss of employment due to the closure of the company and ordered its deletion from taxable income. The case highlighted that Mr. H did not voluntarily resign, as his job was terminated due to the company's decision, thus reinforcing the view that the amount received was not taxable. The appeal was dismissed in favor of the Appellate Assistant Commissioner's decision. |
| Summary |
In this significant case heard by the Income Tax Appellate Tribunal, Dacca, the primary issue revolved around the tax implications of a compensation payment received by Mr. H upon the closure of V Company’s operations in Pakistan. Mr. H, who had served as a Manager and Director, was paid Rs. 12,000 after the company decided to cease its business activities, which raised questions regarding whether this payment constituted taxable income or compensation for loss of employment. The tribunal examined the circumstances surrounding the payment, including the company's efforts to transfer its business and the subsequent decision to close down operations due to market conditions. The judgment emphasized that the payment was a form of compensation for loss of employment rather than remuneration for services rendered, thereby exempting it from taxation. This case serves as a crucial reference for similar disputes relating to employment termination and severance payments, underlining the importance of understanding the nature of such payments in tax law. Keywords: income tax, compensation for loss of employment, employment termination, tax law, severance payment, tribunal decision, V Company. |
| Court |
Income Tax Appellate Tribunal, Dacca
|
| Entities Involved |
V Company,
Mr. H,
Mr. S
|
| Judges |
A. MANNAN,
A. AHMAD
|
| Lawyers |
M. Karim, D.R.,
S. M. Hussain, Advocate
|
| Petitioners |
|
| Respondents |
|
| Citations |
1964 SLD 539,
(1964) 9 TAX 38,
1964 PTD 38
|
| Other Citations |
(1962) PTD Vol, IV 150,
(1961)3-TAXATION 342,
(1959) 36 I. T. R. 84,
(1945) 13 I.T.R. 436
|
| Laws Involved |
Income-tax Act, 1922
|
| Sections |
7(1) Explanation 2
|