[1986 Pan Am Hijack] Considering whether compensation can be termed as income: Income Tax Dept to Gujarat High Court

The Income Tax Department told the Gujarat High Court on Tuesday that it was seriously considering whether compensation towards the death of kin in a terrorist attack can be termed as income [Kalpesh Babubhai Dalal V Income Tax Officer]..The issue came before the High Court after the Income Tax Department sought to tax the compensation received by a man for the death of his wife who was killed by terrorists in the infamous Pan Am flight hijack of 1986..A Bench of Justices JB Pardiwala and Nisha Thakore, which was set to adjudicate on the issue, was requested by the counsel for the department to defer adjudication for a short duration since the matter was under consideration by the department. "The highest persons are looking into the matter. They want to find out if something can be done. If this can wait for 2-3 weeks. They are trying to work out something," he submitted..The Court agreed to the submission of the counsel, stating, "Let this adjudication wait for sometime. If the department on its own deems fit to withdraw notices, that should be the end. Otherwise, the Court shall proceed to answer the main issue involved.".During the previous hearing, the Court asked the revenue department whether it was serious about contesting the claim of the petitioner that the compensation amount cannot be taxed."Is the revenue department seriously contesting? Something that has been received as compensation, can it be taxed?"The Court eventually framed the following questions of law:"1) Whether this compensation can be termed as income for the purpose of Income Tax Act.2) Whether notice issued for assessment under 141 is a nullity.".The petitioner's wife was shot dead by terrorists while onboard Pan American World Airways flight 73, which was on its way from Mumbai to New York with a stopover at Karachi. The aircraft was taken over by terrorists when it had landed at the Karachi airport. More than 50 people were killed by the hijackers..A court in New York had awarded the petitioner ₹20 crore compensation. However, he did not show the compensation as income in the tax returns filed for the assessment year 2014-15.When the Bench remarked that the compensation amount was very huge, counsel for the petitioner replied,"The original compensation was $10 Million. But after lawyer fees, this was the balance amount.".Advocate Bandish Soparkar appeared for the petitioner. The matter will be heard next on April 19.