[1986 Pan Am Hijack] Can compensation received by husband whose wife was killed by terrorists be taxed as 'income': Gujarat HC to examine

The Gujarat High Court is set to decide if compensation received towards death of kin in a terrorist attack can be termed as 'income' and subject to tax under Income Tax Act..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 at the outset asked the revenue department today whether it was serious in 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 stop over 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 including the wife of the petitioner in the present case..A court in New York had awarded him ₹20 crore compensation. However, the petitioner did not show the compensation as income in the tax returns filed for the assessment year 2014-15.On the nearly 20 crore given as compensation, the Bench remarked,"Compensation amount is very huge.""The original compensation was $10 Million. But after lawyer fees, this was the balance amount," petitioner's counsel responded.The Court then framed the two questions of law and posted the case for hearing on March 14.