Compensation by employee to employer

 Damages claimed for breach of contract cannot be considered income and income tax cannot be levied on such receipts, the Income-tax Appellate Tribunal, Mumbai has ruled recently. The ITAT held that such income can be considered capital receipts. In a normal case, tax is not levied on capital receipts unless the case involves transfer of assets. If there is transfer of assets, the revenue received would be considered capital gains and taxed accordingly.

You can consider net receipts