Tax Treatment ?

This query is : Resolved

Riyaz Khan (Querist)
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28 April 2009 One of my Client received Rs. 800000/- as Compensation to Waive the right on Agriculture Land which is owned by a Trust. GARDAURI was in the name of my client. However, the registered owner of the land is the Trust.

Now the Trust is paying Rs. 800000/- to my client to waive the Tenancy Rights over that Agriculture Land. And the Trust is paying that amount BY CHEQUE to my client.

Further, the Trust is also selling the that Agriculture Land to any other person.

So the questions are:

1. What wud be the Tax Treatment in the hands of the Trust and My Client (i.e an Individual)

2. Is there any way out to save the Tax on this amount of Rs. 800000/-. Please note that the amount is being paid by the Trust is Through CHEQUE...

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Expert)
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29 April 2009 800000/- would be taxable in hands of tenent and the cost of land would increase by 800000 in the hands of trust

Riyaz Khan

Riyaz Khan (Querist)
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30 April 2009 Specfify the Tax Treatment in the hand of the Tanent with HEAD OF INCOME and nature of INCOME. Is there any way out to save the entire tax on this Rs. 800000/-

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Nilesh Damji Chheda

Nilesh Damji Chheda (Expert)
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03 May 2009 Dear Rajan

Rs. 800000/- received by Tenant would be taxable under the head capital gain u/s. 45, the extinguishment or relinguishment of rights is also treated as transfer.

for saving u need to study the sec. 54B for sale of agricultural land, whether tenancy right of agricultural land will be covered under the same.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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08 June 2009 You would be eligible for exemption u/s 54F and 54EC if you invest the sales consideration in a house property or investment in specified bonds.