Taxability of additional compensation

I Think Amount Met From Person Who Caused This Accident is Fully Taxable..........

n Abt. Insurance Company....No Clarification in Act.......

Well, Let Other Join This Discussion..& Have A Gentle Solution For This Matter..........

Dear Ravi,

Can u plz clarify whether that Insurance claim is in respect of medical/health/accidental insurance  or in respect of a vehicle..

Further, if in respect of vehicle den whether dat vehicle is used in businesss/profession or for personal purpose........

pls clarify, in what respects the insurance claims were recieved!!!!!!!!!!!!

He has got accidental relief under an accident insurance cover. He has no business of his own. The vehicle in which he met wit an accident was his personal vehicle.

Now this year he is supposed to get compensation from Travel agencies which caused the accident. I have a doubt whether such compensation is taxable in his hands ??

Any more information on this, pls feel free to ask

Dear Ravi,

For me, It cannot be taxed simply because it is a receipt which is capital in nature...........

Now second question that comes is what will be the treatment in the hands of company/travel agency making the payment?

They will get the deduction of this amount paid as compensation since for them it is revenue in nature........

Mere fact that payment is capital receipt in payee’s hands is not relevant - The fact that a certain payment constitutes incomes or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. Whether it is capital expenditure or revenue expenditure would have to be determined having regard to the nature of the transaction and other relevant factors - Empire Jute Co. Ltd. v. CIT (SC)