In ITA No. 472/PUN/2022-ITAT- ITAT (Pune) holds that voluntary payment by the employer, out of appreciation for the employee, falls outside the rigours of section 17(3)(iii) of Income Tax Act
Members R.S. SYAL (VICE PRESIDENT) & PARTHA SARATHI CHAUDHURY (Judicial) [03-04-2023]

Read Order: Mahadev Vasant Dhangekar v. The Asstt. CIT, NFAC, Delhi

LE Correspondent

Mumbai, April 20, 2023: The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that when an employer voluntarily makes the payment, out of appreciation for the employee, the same falls outside the rigours of section 17(3)(iii) of the Income Tax Act, 1961.

Taking note of the provisions of Section 17(3)(iii), the Tribunal observed that it is evident that any payment received whether in lump sum or otherwise by an assessee from any person after cessation of his employment is also considered as profit in lieu of salary and is to be brought to tax accordingly. However, in the present case, as contented by the assessee that the payment has been made voluntarily by the employer out of his own sweet will and is not compensation, the Tribunal was of the view that without establishing the letter as non-genuine or without examining the sanctity of the payment made, simply invoking the provisions of the Act was not appropriate for the quasi-judicial authority.

Allowing the appeal of the assessee, Assessing Officer was directed to delete the addition from the hand of the assessee.