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Income tax on lump sum amount received by Advocate

This query is : Resolved 

An advocate, super senior citizen, received a substantial amount in lumpsum from Advocate Welfare Fund' upon permanently stopping his legal practice. Whether that amount is liable to income tax. If so, the said amount is to be offered under which 'head of income'.


SIR IN MY OPINION IT SHOULD BE CHARGEABLE UNDER PGBP .....
BECAUSE AMOUNT RECEIVED FOR NOT DOING SOMETHING CHARGEABLE UNDER PGBP

may be it will be charged under income from other sources depends upon the facts of the case and based on the welfare of the scheme.

its taxable under the head PROFIT UNDER BUSINESS AND PROFESSION

Seems the amount is to be assessed under LTCG in view of the following observation.

* Bar council enrollment (Sannath) is an asset per section 2(14)(a).

* Surrendering the enrollment is a transfer per section 2(47(i).

* The amount received from Advocate Welfare fund is income per section 45(1).

* Cost of acquisition is NIL per section 55(2)(a)(ii).

There is a debatable issue whether enrollment with bar council after passing LLB degree is an asset. In that case member of the every association is an asset. Whether stopping of practice will tantamount to surrendering of enrollment. Is this a sale of Council enrollment to any one or surrendering the same in favour of any body. Cost of acquisition cannot be Nil since this has to be obtained by paying some fees.


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