Severance Compensation of Rs.15.5 Lakhs Deemed Capital Receipt, not Taxable u/s 17(3) of Income Tax Act: ITAT deletes AO Addition

Severance Compensation Deemed Non-Taxable: The ITAT ruled that severance compensation of ?15.5 lakhs is a capital receipt and therefore not taxable under Section 173 of the Income Tax Act. This ruling came in favor of an employee who received severance pay upon termination, and the tax authority’s addition was deleted. The tribunal's decision emphasizes that such payments, not part of regular income, cannot be taxed as salary, thereby providing relief to individuals receiving severance packages.