Sushmita Sen case- capital receipt not liable for taxation.
Mumbai, Nov 19 (PTI) The Income Tax Appellate Tribunal (ITAT) passed an order. In the favour of Sushmita Sen. Ruling the Rs 95 lakh that the actor received from beverages maker CocaCola for settling a sexual harassment complaint. This would not classified as an ‘income’.
According to a November 14 order. The tribunal accepted the contention that the sum of “capital gain” is not an income which liable for tax. It also did away with a penalty of Rs. 31.35 lakh that was slap on her for concealment of this “income”.
The case pertains to a Rs 1.50 crore contract between CocaCola and Sushmita Sen which is end in 2003. She had received a sum of Rs 1.45 crore from CocaCola for the final settlement.
In her tax filings, the she showed only Rs 50 lakh as “income”. And the rest as extra receipts which are capital gains in nature.
“The only logical deduction was that the company accepted the contention of the assessee of the alleged sexual harassment and paid the compensation to avoid negative publicity/embarrassment which would have jeopardized the business of the company world over,” the order said.
“The additional compensation was not towards the service render and do not arise out of the contractual terms,” it adds.
Giving more details, the order said Sen allege the termination done for “collateral and illegal purpose of punishing the assessee for resisting attempts of sexual harassment” by an employee of CCIL (Coca Cola India).
Accepting Sen’s contention, the tribunal at the final settlement of Rs 1.45 crore is “not a simple settlement of commercial claims”. And only Rs 50 lakh was the ‘income’ due to her from the beverage maker.
“The said compensation do not accrue / arise out of exercise of profession by the assessee and could not be construed to be the income of the assessee or profits and gains of profession…we have no hesitation in deleting the impugned addition of Rs 95 lakh,” it said. PTI AA RSY AAR