THE COMMISSIONER OF INCOME-TAXBOMBAY vs E.D.SHEPPARD

The Supreme Court held that the expression 'compensation for loss of employment' in Explanation 2 to Section 7(1) of the Indian Income-tax Act, 1922, encompasses any payment made to compensate for loss of employment, regardless of legal liability. The Court affirmed the Appellate Tribunal's finding that the shares valued at Rs. 2,21,000/- were given as compensation for loss of employment and thus not liable to tax. The dissenting opinion by Justice Raghubar Dayal was noted, but the majority ruling prevailed.