Amount received from government for land cases

It would be taxable under the head Capital gain. Such Capital gain is not taxable in the year in which capital asset is transferred but it is taxable in the first year in which initial compensation(or part thereof) is first received. Litigation expenses are deductible from sale consideration. So it would be taxable in the year when you actually receive the amount of compensation. Refer provisions of section 45(5) of Income Tax Act

Thank You Kuldip Ji,

Can you please clear one more query 

I will have to give 50 % of the compensation to my friend as we agreed before filling suit against Government So what my friend will shown in his income tax it will be treated as commision income or what? ?

Regards

Deepak