Pan Am Hijack-Terror Attack: Can Compensation Received By Husband For Wife's Death Be Taxed As 'Income'?: Gujarat HC To Examine

The Bench of Justice J. B. Pardiwala and Justice Nisha Thakore pondered over the question as to whether something that has been received as compensation could be taxed as one's income.

In the instant case, the petitioner's wife was one of the passengers of Pan American World Airways flight 73 [on September 5, 1986] which was on its way from Mumbai to New York and she was killed by the terrorists after the flight was hijacked and the flight was forced to land in Karachi.

It may be noted that more than 50 people were killed by the hijackers, which included the wife of the petitioner, Kalpesh Babubhai Dalal, and thereafter, the petitioner received compensation of a total of 20 Crores pursuant to the orders of a New York Court.

Thereafter, the Income Tax Department sought to tax the petitioner for the compensation received by him on account of the death of his wife, who was undisputedly killed by the terrorists/hijackers.

Thus, the petitioner moved to the High Court challenging the decision of the IT department to tax the said compensation treating it to be his income.

Against this backdrop, the Court initially sought to know from the parties as to whether the said compensation be termed as income at all. At the request of the parties, the Court has posted the matter for further hearing on March 14.

Case title - Kalpesh Babubhai Dalal v. Income Tax Officer, Ward 5(3)(1), Ahmedabad