one of my relative got compansation from Govt on complusary aquistion of agriculture land.compansation covers land cost plus interst componant for delayed payment.whether interst componant is taxable?
10 Replies
CA Saurabh Shukla
(Accounts Executive)
(223 Points)
Replied 17 February 2010
Rama Bai case overruled by Finance Act, 2009 in which int. on delayed or enhanced can claim on Accural basis.
Now, it will be taxable under "income from Other Sources." in the year of receipt.
U/s 57, 50% dedution claimed on Int. on delayed or enhanced compensation.
C.Balaji
(Learner)
(1867 Points)
Replied 17 February 2010
Mr.Sailesh..
10 (37) - Agricultural land acquired by govt. , it is exempt from tax - not taxable..
I think the interest componenet will be taxable under Income from other sources...
Ashish M
(Chartered Accountant)
(2731 Points)
Replied 17 February 2010
The interest on delayed payment is taxable under the head 'Income frm other sources' in the relevant yr. to which the interst relates.
In case of RAma bai and sutlej cotton mills, the in assessee follows accrual system of accounting, then interest shall be spread over the period beginning frm the date on which aset was compulsory acquired, if follows receipt system, then taxable in yr. of receipt
shailesh
(Service)
(227 Points)
Replied 17 February 2010
civil court has observed in the order that "all the opponants are directed to prevent deduction of income tax"
now question is still assesee is still liable for taxation?
CA Saurabh Shukla
(Accounts Executive)
(223 Points)
Replied 18 February 2010
Dear shailesh pls. clear your statement....................
CA Saurabh Shukla
(Accounts Executive)
(223 Points)
Replied 18 February 2010
Dear shailesh pls. clear your statement....................
shailesh
(Service)
(227 Points)
Replied 18 February 2010
Dear all
relative has got compansation by civil court order in LAQ (complusary land aquisition)case=land cost+delayed interest componant .land is in rural area. in this LAQ case last sentence is that" all opponants( i.e paying authority i.e. Govt.department) are directed to prevent deduction of income tax.
since land is in rural area(10km away from city with <9000 population) no capital gain tax, but is it possible that no tax on interest componant recieved, by court order last sentance consideration?
or assesee still liable for taxation for what he recieved of interest componant in his IT return?
CA Saurabh Shukla
(Accounts Executive)
(223 Points)
Replied 25 February 2010
let assume u get compensation at time and u deposited in bank. So, on that int. u have to pay tax.
So, why not on this int. income.
Int. has no relation with Capital Gain exemption.
and as per my prev. post u can claim 50% deduction on it U/s 57.
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