Section 28 (ii)

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Vinit (Querist)
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17 March 2014 section 28 (ii)anycompensationor other payment due toor received by,? (a)anyperson, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto; Please Explain this section with an Example... If a CEO of an Indian company receives termination compensation, Will it be taxable under the head of 'Salaries' or 'Business and Profession' ?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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17 March 2014 Dear Vinit,

well i believe it is going to be a subjective call and will differ from case to case. Where the company and CEO feels that it is closer to being treated under 28(ii), the same would exclude it from salary. if the same is however included in salary, it cannot be taxed again under Income from business.

For eg, if there is a CEO and a MD, then there are chances to argue that MD should definitely be covered under 28(ii). in such a scenario it may be argued that CEO is not having the whole or substantial control over affairs of the company as MD is more powerful!

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