Capital receipt

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This discussion clarifies the income tax treatment of a capital receipt, specifically compensation received from a builder for failing to hand over a plot. The consensus is that such compensation, beyond the refund of the advance, is generally not taxable. It can be shown under 'exempt income' in the Income Tax Return (ITR) under the 'Any other' nature, without needing to quote a specific section number. While a case law or specific section isn't strictly required for declaration, resources are provided for self-satisfaction and further research.

R K ARORA

R K ARORA (Querist)

22 January 2020 Respected Sir,
Treatment of capital receipt for the purpose of income tax and ITRmay please be advised.
regards
R K ARORA

Amol S Joglekar

Amol S Joglekar (Expert)

23 January 2020 what sort of capital receipt is this? There is no any specific disclosure as such in ITR

R K ARORA

R K ARORA (Querist)

23 January 2020 compensation received from a builder for his failure to hand over a plot for which 50 % advance was paid 7 years back..Besides refund of the advance amount, the compensation Rs. 13 lakh has been allowed by the State consumer disputes redressal commission..

Amol S Joglekar

Amol S Joglekar (Expert)

23 January 2020 Generally it is NOT taxable. Care be taken to read the exact words of the order.
You can show it under exempt income. Nature : Any other. Write the description and amount

R K ARORA

R K ARORA (Querist)

24 January 2020 Respected Sir, Very kindly intimate the section under which the above said amount is exempt.
with regards.

Amol S Joglekar

Amol S Joglekar (Expert)

25 January 2020 Show it under exempt income. Nature : Any other. Write the description and amount.
Section number is NOT required to be quoted.

R K ARORA

R K ARORA (Querist)

26 January 2020 Respected Sir,
I agree that Section is not required to be quoted. But section, rule, order, judgement on the subject is required for self satisfaction, before availing the exemption. So, very kindly intimate one case law or anything which can be relied upon, in support of your advice.
With best regards

Amol S Joglekar

Amol S Joglekar (Expert)

28 January 2020 I think you can refer the definition of INCOME u/s 2(24) of income tax Act.

Amol S Joglekar

Amol S Joglekar (Expert)

28 January 2020 please go through the link

https://abcaus.in/income-tax/compensation-builder-failure-give-possession-flat-non-taxable.html

R K ARORA

R K ARORA (Querist)

30 January 2020 Respected Sir,
Before writing (22January 2020) the query, I had seen the available information and got the hint that the compensation received from builder for failure to give possession of plot held not taxable. In order to get the exact No. of case law, ITAT, Court, full particulars, which may enable me to get the complete judgement from the internet, I had made(26January 2020) this query. The desired information is still awaited.
Thank you, for taking interest in solving my query. I hope to get a good solution.
With best regards

Amol S Joglekar

Amol S Joglekar (Expert)

03 February 2020 https://indiankanoon.org/doc/51901773/

your query on this is always welcome

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