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Tax Publishers Freelancing journalist receiving compensation for non-renewal of her freelancing activity - whether taxable under section 28(ii)(e) or under section 56(2)(xi) *Facts:* Assessee a freelancing journalist was rendering journalist services to Der Spiegel owned by Spiegal Verlag as a freelancer. The freelancing contract was not renewed. The non-renewal was contested before Hamburg court which was dismissed. Subsequently writ was filed in Delhi HC and eventually Spiegal Verlag agreed to compensate Rs. 3 crores for her non-renewal. This compensation was held taxable by the revenue authorities either as compensation arising out of termination or modification of terms and conditions relating to business under section 28(ii)(e). On the contrary the same would need to be taxed under section 56(2)(xi) was revenue's plea. On higher appeal to ITAT assessee contested that the word profession is not used in Section 28(ii)(e) and it is only employment compensation which can be brought in the realm of Section 56(2)(xi) that too arising out of termination. In her case non-renewal was not termination is what she pleaded. Held in favour of the assessee that - Where the law wanted to include profession they have been specific to include the same - thus Section 28(ii)(e) cannot cover profession. The compensation received by the assessee was not arising out of employment. Non-renewal was not termination/retrenchment or modification of contractual terms. Hence the compensation was held as non-taxable under both the sections. *Applied:* G.K. Choksi & Co. (2007) 295 ITR 376 (SC) : 2007 TaxPub(DT) 1554 (SC) held that business does not include profession. Section 28(ii)(e) any compensation due or received by any person, by whatever name called, at or in connection with the termination or the modification of the terms and conditions, as the case may be, of any contract relating to his business shall be chargeable to tax under the head Profits and gains of business or profession. Section 56(2)(xi)Any compensation or other payment due to or received by any person by whatever name called in connection with termination of his employment or modification of the terms and conditions relating thereto. *Case:* Padma Rao v. CIT 2024 TaxPub(DT) 455 (Del-Trib)

Tax Publishers

Freelancing journalist receiving compensation for non-renewal of her freelancing activity - whether taxable under section 28(ii)(e) or under section 56(2)(xi)

Facts:

Assessee a freelancing journalist was rendering journalist services to Der Spiegel owned by Spiegal Verlag as a freelancer. The freelancing contract was not renewed. The non-renewal was contested before Hamburg court which was dismissed. Subsequently writ was filed in Delhi HC and eventually Spiegal Verlag agreed to compensate Rs. 3 crores for her non-renewal. This compensation was held taxable by the revenue authorities either as compensation arising out of termination or modification of terms and conditions relating to business under section 28(ii)(e). On the contrary the same would need to be taxed under section 56(2)(xi) was revenue's plea. On higher appeal to ITAT assessee contested that the word profession is not used in Section 28(ii)(e) and it is only employment compensation which can be brought in the realm of Section 56(2)(xi) that too arising out of termination. In her case non-renewal was not termination is what she pleaded.

Held in favour of the assessee that -

Where the law wanted to include profession they have been specific to include the same - thus Section 28(ii)(e) cannot cover profession.

The compensation received by the assessee was not arising out of employment.

Non-renewal was not termination/retrenchment or modification of contractual terms.

Hence the compensation was held as non-taxable under both the sections.

Applied:

G.K. Choksi & Co. (2007) 295 ITR 376 (SC) : 2007 TaxPub(DT) 1554 (SC) held that business does not include profession.

Section 28(ii)(e) any compensation due or received by any person, by whatever name called, at or in connection with the termination or the modification of the terms and conditions, as the case may be, of any contract relating to his business shall be chargeable to tax under the head Profits and gains of business or profession.

Section 56(2)(xi)Any compensation or other payment due to or received by any person by whatever name called in connection with termination of his employment or modification of the terms and conditions relating thereto.

Case: Padma Rao v. CIT 2024 TaxPub(DT) 455 (Del-Trib)