On Monday, the Gujarat high court questioned the income tax department that the amount received as compensation for death was taxable under the law. Compensation was received for death during the hijacking of Pan Am flight 73 in 1986. 

The income tax department approached the court on this issue and the court has decided for the hearing on March 14. The court said that it was a unique case and interesting too.

Trupti Dalal was killed in a terrorist attack and her husband Kalpesh Dalal, received Rs 18.6 crore compensation amount. The compensation was awarded by a court in Columbia in the US. Kalpesh Dalal filed the petition objecting to the I-T department’s notices issued last year seeking to levy tax on the amount he received towards compensation for his wife’s death and for reopening an assessment for the year 2013-14 and 2014-15.

Trupti was one of 43 victims who was killed in the terror attack on the flight that took off from Mumbai for New York and landed in Karachi, where four gunmen entered the flight and shed blood on the passengers in September 1986.

Libyan government took the responsibility for the incident and paid $1.6 billion as compensation to the US in 2004. The victims’ families filed lawsuits and the Dalal family received Rs 18.60 crore in three instalments. The layer from Dalal’s family submitted and added that amount received as death compensation could not be considered taxable under the I-T Act.

The I-T department was questioned, by the bench of Justice J B Pardiwala and Justice Nisha Thakore regarding the seriousness of the matter. The departments’ lawyer said that they have full sympathy, but the court interjected that it was the matter was whether any amount received as compensation was taxable or not? The departments’ lawyer said that it would be better to go into the sufficiency of reasons to decide whether the compensation amount was taxable or not.

Source: ET Healthworld