Divorce alimony : taxable or not

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Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2017 Hi,
There was an agreement on stamp paper between both husband and wife that husband will pay an fixed amount of alimony to wife.( Mutual agreement, no court order). After divorce, the entire amount of alimony was paid IN CASH.
Whether this alimony received in cash would be taxable. If not, then pls provide sections concerned or judgement.

Thanks in advance..

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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08 June 2017 As a general principle, a capital receipt is non-taxable while a revenue receipt is taxable.

In an old Mumbai High Court ruling, it was held that monthly alimony, being a regular and periodic return from a decree, would constitute taxable income. In contrast, the lump sum payment received was held to be a capital receipt and, hence, not taxable for the former spouse. This decision was in the context of cash payments and does not deal with assets transferred as a part of the separation.

Querist : Anonymous

Querist : Anonymous (Querist)

09 June 2017 Thanks a lot for your reply...
But whether the decision of Mumbai High court would be bound for income tax authorities of Maharashtra and other state authorities may deny to accept the judgement in their state. As only SC judgements are bounding throughout india.
PLS guide on this issue.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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09 June 2017 Genearally Tax authorities rely on Court decisions unless authority has any strong reason in this regard.

Querist : Anonymous

Querist : Anonymous (Querist)

09 June 2017 Is there also any provision which makes receiving in cash as taxable..Can the entire amount depositing in bank would be good from tax point of view at once.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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09 June 2017 Yes as per Sec 269ST receiving amount more than Rs.200000/- in cash results in penalty upto 100% of amount.

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