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Compensation received from Tea Board

Abhishek Pithisaria (Student) (150 Points)

30 August 2017

X has received Rs. 2,00,000 from Tea Board on account of replacement of tea bushes which has been destroyed due to fire.
Will the compensation received for replacement of tea bushes be fully taxable or fully exempt?? (S. 10(1))

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2 Replies

K Laxmisha Rao (32 Points)
Replied 30 August 2017

Tea bushes are capital asset and Compensation received is not an income under section 2(24) and hence is not chargeable to tax under section 28 i.e under Profits and Gains from Business or Profession.

K Laxmisha Rao (32 Points)
Replied 30 August 2017

Under section 45, only insurance on capital asset is covered, as tea bushes are not capital asset in Accordance with definition of IT Act, compensation received is not taxable under head Capital gains
Therefore no question of exemption under sec 10

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