Compulsory acquisition of land and building by NHAI

This query is : Resolved

Gaurav Sharma (Querist)
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18 July 2023 My client has been awarded compensation of account of compulsory acquisition of land and building by NHAI. My only doubt is whether the compensation received on account of "building" is taxable or not, as compensation received on compulsory acquisition of land is exempt.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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18 July 2023 CBDT vide Circular No. 36/2016 dt. 25/10/2016 clarified that the compensation received in respect of award or agreement which has been exempt from levy of Income Tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of Income Tax Act, 1961 even if there is no specific provisions of exemption for such compensation in the Income Tax Act, 1961. In the said Circular it is also clarified that no distinction had been made towards compensation received for compulsory acquisition of agricultural land and non agricultural land in the matter of providing exemption from income Tax under the RFCTLARR Act.
Here the compensation is paid for land part only. No compensation would have been given separately for building over it.