LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Guide me

CA NEHA AGARWAL (Practise) (227 Points)

30 December 2011

Hello Friends

Here is one query my client has asked me...i want ur help....He got the compensation on sale of his land after abt. 5years from its sale..So he recd. the sale amount and interest on it also..how the interest will be taxable? and the capital gain will be taxable in the year of sale or in the year of compensation recd?..its not a compulsory acquisition.....

Please reply me as soon as u can.

Reply
Follow
Share

7 Replies

Jinay (Article) (172 Points)
Replied 30 December 2011

praveen (Chartered Accountant) (6971 Points)
Replied 30 December 2011

As per Section 45(1)

Any profits or gains arising from the transfer 737 of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F , 54G and 54H be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.

Capital Gains must be charged to tax when the sale is complete irrespective of whether he receives the money or not.

Interest received shall be charged under income from other sources.

Yogesh Bhandari (CA FINAL Student) (429 Points)
Replied 30 December 2011

Sorry to say Jinay but i am not agree with you,,
As per Income Tax Act, Capital gain taxable in that year in which Transfer of capital Asset takes place. In this case, sale of Land means assessee transfer right of ownership, so it will be taxable in that year in which sales of land takes place.

Yogesh Bhandari (CA FINAL Student) (429 Points)
Replied 30 December 2011

Agree with praveen,, and interest will be taxable in the year of receipt.

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 31 December 2011

Originally posted by : praveen
	As per Section 45(1) Any profits or gains arising from the transfer 737 of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F , 54G and 54H be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place. Capital Gains must be charged to tax when the sale is complete irrespective of whether he receives the money or not. Interest received shall be charged under income from other sources.

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 31 December 2011

Gain from the sale of land will be treated as income and will be considered for taxation under the head "Income from Capital Gain". Secondly the interest income will also be treated as income and it will be considered for taxation under the head "Income from other sources"

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 31 December 2011

Taxation may be either on accrual basis or on receipt basis but if return of past has been already submitted ,now it can be on only receipt basis i.e.in the year of receipts.