Your contractor might be able to suggest a way to work around that dead space. Having a larger shower would be more advantageous than an oversized window.

I would keep the window. Tile the entire back wall behind the tub and the shower all the way around that window to the ceiling. Extend the shower all the way to the bathtub and put a stationary glass panel up on the shower head end. Then leave space to just walk into the shower without any door or additional wall of any sort between the tub and shower space. It will make the bathroom feel more open and allow for a bigger shower. let the space work together. I would also install a hand held shower down by the tub with its own water supply and controls so you can sit and shower as well.

On a side note I would get rid of that tub in an instant given the opportunity.

@sooz001 thank you. Can't change the window because of city regulations ... That window is in the front of the house (two story house). Contractor said death space has to stay. Can be turned into a nook inside the shower for bottles which I currently don't have, or a book on the outside for decorative purposes, or leave as is... I can always eliminate it but then I'd have a totally empty space between the two. I don't know what's worse looking.

@midwest remodeling thank you for the suggestion! I didn't think of tiling up all the way around the window actually. I thought of tiling up to the window and tiling the wall where the towels are on all the way up to the ceiling. The window has to stay no matter what because it is in the tony of the house and that can't be changed because of city ordinances and HOA issues ... Blah blah blah. Not worth the trouble and money. I'd much rather have a stand alone tub, but those don't quit fit the budget at this time and figured I'd try to make this one work and come up with some sort of design to rejuvenate the space and give it a more contemp. Feel if at all possible. I'm having a hard time visualizing the shower though. Can you point me to any photos maybe? Wouldn't there be spills of water outside of the shower? I forgot to mention the hubby wants a rain shower. Not sure if that changes the design LOL

Here is a pano of the space