Compensation received from foreign Govt cannot be taxed: HC

Compensation received from foreign Govt cannot be taxed: HC

New Delhi: The Delhi High Court has held that compensation received by a citizen from a foreign government cannot be taxed, the Delhi High Court has said.

The observations of a Division Bench comprising Justices B.D. Ahmed and Rajiv Shakdher came in connection with the case of an Indian journalist who was compensated by the American authorities after she alleged that she had been discriminated against on sexual ground when she applied for a job in the government broadcasting agency.

Dismissing a petition filed by the IT department which intended to tax the compensation amount by treating it as income, a Division Bench said that it could not be treated as salary or taxable income.

In this case, the journalist Rani Shankar Mishra had applied for a job in Voice Of America in 1982 but the state-owned entity allegedly refused to recruit her despite her clearing a competitive exam.

She then filed a suit in a US court seeking compensation for discrimination. Since there were 1,100 cases pending in different American courts on the same issue, the US government in order to settle all such cases offered a $508 million compensation for all the 1,100 complainants, including Mishra.