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Capital gains

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Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2013 A compensation received by a wife on behalf of his husband due to his death. Husband is 50% Tenant of a flat which is on Paghdi System. Now tenants are leaving the place and the landlord is paying the compensation. I just wanted to know whether the amount recd by wife (on account of husband)is taxable or not. whether this is surrender of tenancy rights or not? if yes,than whether surrender of tenancy rights is taxable or not.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 May 2013 The tenancy rights are heritable under the State's Rent Control Act. After the death of the tenant it passes in favour of the heirs of the deceased tenant. Transfer of the right attracts capital gains tax and cost of acquisition of the right, in case no amount was paid, will be taken at NIL vide Section 55(2).

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2013 Thank you Mr. Bafna for Prompt reply. That means it is taxable in the hands of wife as capital gain tax. but she can invest the capital gain in some bonds or property to avoid tax.

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