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194LA TDS ON COMPULSORY ACQUISITION

18 July 2021

TDS deducted on INTEREST on compensation received on compulsory acquisition of agriculture land. Compensation already received Rs 56 lakh some years ago now INTEREST received Rs 20 lakh and TDS deducted on this interest @ 10%= 2 lakh U/s 194 LA. Is this interest taxable or exempt. This TDS IS REFUNDABLE OR NOT???

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8 Replies

Balamurali Unnithan MS (STUDENT) (1631 Points)
Replied 18 July 2021

Yes, It's refundable up to 50 % -Simply Means 50% is taxable.

You get relief of 50% u/s 57 -Interest on enhanced compensation.

Compulsory Acquisition -194LA-Full Amount is Exempt.

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Gouranga Roy (4 Points)
Replied 18 July 2021

Interest received on compensation or enhanced compensation is exempt income as per section 10(37) of the Income Tax Act.
There are so many case laws in this regard.

Balamurali Unnithan MS (STUDENT) (1631 Points)
Replied 18 July 2021

Interest is charitable to tax Ji, Presently not added to the category of exempt income.

For filing better practice -Add the interest income and deduct 50% u/s 57.

You are right Ji If cannot refund the same like otherwise.

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 18 July 2021

Yes TDS is refundable at the time of filing return

Gouranga Roy (4 Points)
Replied 18 July 2021

As Mr. Praveen has said that the land is an agricultural land, and if the land is agricultural land as per the provision of IT Act., then the interest amount decided by the court is exempt as per section 10(37). The relevant part of the section is as under,
10(37)..............
[iv] such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004.

Explanation.—For the purposes of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority;

In this case it is better to file the return and claim the TDS amount as refund. If you get any notice from the department and if your case any demand is raised in assessment, then you can file appeal before the concern appellate authority.