The Income Tax Department on Monday sought time to respond to a notice from the Gujarat High Court on tax demand on death compensation received by the kin of a woman killed in the 1986 Pan Am Flight 73 hijacking incident.
The IT department has sought time to respond to the court’s query whether the amount of such compensation paid by a foreign court can be treated as “income” and if so, under what provisions of law. intends to impose taxes.
The case pertains to a petition filed by Kalpesh Babulal Dalal, whose wife was among those killed during the hijacking of a Pan Am flight in 1986 while traveling from Bombay to New York.
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After the death of his wife, Dalal received around Rs 18.60 crore in a compensation judgment from a Columbia, New York court. He had received compensation in three tranches of Rs 8.11 crore in FY 2012-13, Rs 34.24 lakh in FY 2013-14 and Rs 10.15 crore in FY 2014-15.
However, the IT department has sought reopening of the assessment for the financial years 2013-14 and 2014-15, claiming that the amount of compensation was not shown in the IT returns filed by the broker. In January, Dalal moved the Gujarat High Court following a notice from the IT department last year challenging the taxpayer’s move to levy income tax for the amount of compensation.
The petitioner has argued that the amount of compensation is not an income and hence cannot be taxed. During the hearing, Dalal also told that the investigation wing of the IT department had issued a summon in 2014 to which he had replied. The petitioner said that he has also answered all the questions related to bank transactions.
Describing it as a “unique” case, a division bench of Justices JB Pardiwala and Nisha Thakor had on January 24 issued notice to the IT department to respond to the arguments raised by the petitioner.
The next hearing of the case will be on March 14.
Trupti Dalal was traveling on a Pan Am flight for a cultural performance with her 21-member dance troupe and her 11-year-old son. Twenty passengers, including two Americans and 13 Indians, were killed after a Mumbai-New York flight with 360 passengers was hijacked by four Palestinian militants from Karachi, Pakistan, on 5 September 1986.