COMMISSIONER OF INCOME TAX Vs. TARA SINHA

JUDGEMENT

(1.) The Respondent Assessee - Mrs. Tara Sinha (hereafter 'Assessee'), was working as the President of M/s Tara Sinha McCann Erickson Pvt. Ltd. ('TSME'), an advertising agency. She also held 51% shares of the said company, and McCann Erickson Worldwide Inc. ('MEW') held 40% of the shares of TSME. The remaining 9% shares were held by Associated Corporate Consultants Pvt. Ltd.

(2.) The Assessee filed her return of income for the Assessment Year ('AY') 1995-96 declaring an income of Rs. 12,74,721/. During the AY i.e. on 9th March, 1995, the Assessee resigned from TSME. Upon her retirement, she received payments as under:

(3.) The Assessing Officer ('AO') issued a show cause notice to the Assessee as to why the amounts received by her from MEW should not be treated as a revenue receipt and as to why her claim, that the said money is a capital receipt, should be rejected. As part of the proceedings, the AO recorded the Assessee on 9th Dec., 1997 and the AO vide assessment order dated 26th March, 1998 made an addition of Rs. 3,15,31,750.00 to the returned income of the Assessee.