Summary
In 2014, the Income Tax Department had summoned a person named Kalpesh and asked about this income for the compensation received for the death of his wife during the plane hijacking. In response, Kalpesh told that he got this money as compensation in the decision of legal battle in America. The department reopened the case last year. Know what else the High Court has said..
The Gujarat High Court has asked the Income Tax Department whether financial assistance to the victim’s family as compensation for death can also be treated as income. And can this also be taxed? The Income Tax Department had sent a notice to Kalpesh Dalal of Gujarat for payment of tax on compensation of Rs 20 crore received for the death of his wife in the 1986 plane hijacking case. The bench has sought answers to these questions from the Income Tax Department till the next hearing on March 14.
A division bench of Justice JB Pardiwala and Justice Nisha Thakur told Income Tax, “Your principled argument is that compensation is not income and cannot be taxed.” We are not showing any sympathy in this matter, just understand from your notice that whatever is received by way of compensation can be treated as an income so that you can tax it. Can this happen? The bench asked the Income Tax Department, the petitioner claims that the compensation amount cannot be taxed, have you sought to oppose it?
The petitioner was compensated by the New York court in 2014-15
Petitioner’s wife Tripti died in 1986 during the hijacking of a Pan American World Airways flight. She was among the 50 people who died in the accident. The New York court had awarded Rs 20 crore compensation to Kalpesh Dalal in 2013-14 and 2014-15 as compensation. Kalpesh, however, did not show this amount as income in his tax return for 2014-15.
Income Tax summoned in 2014
In 2014, the Income Tax Department had summoned Kalpesh and asked about this income. In response, Kalpesh told that he got this money as compensation in the decision of legal battle in America. The Income Tax Department reopened the matter last year and issued a notice to the broker asking him to pay income tax on Rs 20 crore of compensation. After which Kalpesh moved the High Court.
13 Indians were killed in the accident
Tripti Dalal was traveling on a Pan Am flight to New York on 5 September 1986 with her 11-year-old son and a 21-member dance troupe. A total of 360 passengers were on board the flight that took off from Mumbai. Four Palestinian terrorists hijacked this plane from Karachi, Pakistan. Among the 50 people who died in the firing of terrorists, including Trupti, were 13 Indians and two Americans.
Expansion
The Gujarat High Court has asked the Income Tax Department whether financial assistance to the victim’s family as compensation for death can also be treated as income. And can this also be taxed? The Income Tax Department had sent a notice to Kalpesh Dalal of Gujarat for payment of tax on compensation of Rs 20 crore received for the death of his wife in the 1986 plane hijacking case. The bench has sought answers to these questions from the Income Tax Department till the next hearing on March 14.
A division bench of Justice JB Pardiwala and Justice Nisha Thakur told Income Tax, “Your principled argument is that compensation is not income and cannot be taxed.” We are not showing any sympathy in this matter, just understand from your notice that whatever is received by way of compensation can be treated as an income so that you can tax it. Can this happen? The bench asked the Income Tax Department, the petitioner claims that the compensation amount cannot be taxed, have you sought to oppose it?