Interest and compensation received on cancellation of property agreement- taxation

Hi All,

How will interest and compensation received on cancellation of property agreement be taxed? The agreement for purchase of property was entered into in 2017 and it is now cancelled paying rs 10 lakh as interest and compensation extra.

Will it be taxed under capital gains or income from other sources?

If under capital gains (sale of right to a property), then will section 54EC be availed (capital gain bonds) ?

If the cancellation agreement was worded differently would the taxation be different?



 

Replies (1)
In my opinion it should be taxed under Other Sources. As the sale of neither property nor rights materialised the receipt is purely in the nature of 'compensation for cancellation' and not 'compensation for sale'.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
10 November 2026
FP&A Executive

Gujarat Guardian

Ankleshwar

CA Final

View Details
Company
21 October 2026
CA INTER/ BCOM WITH EXPERIENCE

CA S KUMAR GUPTA & CO

Amritsar

CA Inter

View Details
Company
14 October 2026
GST & TDS ASSISTANT

AGGARWAL SANJAY & ASSOCIATES

New Delhi

B.Com

View Details
Company
Featured 07 November 2026
Paid Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
30 October 2026
Asst Manager Accounts

Goodwin Pumps India Pvt Ltd

Chengalpattu

CA Inter

View Details
Company
28 October 2026
Assistant Director/ Associate Director-Finance & Accounting

Krea University

Chennai

CA

View Details
Company
ARTICLESHIP 17 October 2026
Articled Assistant

RRPM & Associates LLP

Chennai

CA Inter

View Details
Company
ARTICLESHIP 25 October 2026
Article Intern (CA Articleship)

Arpan Bohra & Co

Hyderabad

CA Inter

View Details