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DEATH CLAIM

kamod kumar (practice) (32 Points)

20 April 2010

Dear All,
One of my friend (NRI STATUS) was coming to India by foreign Airlines & at Delhi while coming out from the plane his son slipped from Aero Bridge & finally died. On making calim under the provisions of Clause 16.4(a) of IATA General Conditions of Carriage (Passenger and Baggage) from Airlines & Delhi International Airport Ltd. for their negligence, both agreed to pay Rs.28 lacks (14 by foreign airlines & 14 by Delhi International Airport Ltd). Whether this death claim received is taxable in hand of father.

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2 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 20 April 2010

section 168 of the Act provides that the estate of a deceased person shall be chargeable to tax in the hands of the executors:

(a) if there is only one executor, then, as if the executor were an individual; or
(b) if there are more executors than one, then, as if the executors were an association of persons (“AOP”). In this regard any income of the estate of that previous year distributed to or applied to the benefit of any specific legatee of the estate during that previous year is to be excluded from the income of the Estate but included in the hands of the legatee.

Straightaway it will be clear from these two sections that two assessments have to be made in the year of death. One assessment would be upto the date of death in the hands of the legal representative and the other would be under section 168 in the hands of the executor or executors.

regards,

ratan

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Amir (Learner) (4016 Points)
Replied 21 April 2010

Dear Kamod Sir,

When I first read this question I thought this amount would not be taxable and it must be made exempt either under Sec 10 or by any Circular.

But the above reply made me go mad, trust me I searched a lot but coudn't find anything to keep this claim away from Tax. {The Board's circulars provides relief in case of employees only} - So have to say that it seems correct...

But I still feel that "Law cannot be so harsh to tax a death compensation....."

Pls members help me and get something to prove the above statement.........

Thanks & Regds