Section 31 : Characterisation of payment for compensation

If any person or his associated person has received any compensation amount for the following matters, including payments for insurance, at the time of receipt of the amount for the compensation, such amount has to be included, as the case may be, in computing the income earned from employment, business or investment:-

(a) Compensation for any income earned or likely to be earned by that person from any business or investment or for any amount to be included in the computation of that income or

(b) Compensation for any loss suffered or likely to be suffered by that person from any business or investment or for any expenses to be deducted in the computation of that income.

Provided that,

1) The amount of payment of compensation for physical damage of the resident individual from personal accident shall not be included in the income and such expenses in treatment of damage from such accident shall not be claimed for tax adjustment pursuant to Section 51.

2) The compensation amount to be received for the death of a natural person in the income.