Compulsory acquistion of agricultural land

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Varun Arora (Querist)
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24 July 2012 tax treatment of interest received with enhanced compensation on compulsory acquistion of
1) rural agriculture land
2) urban agruculture land

Mohit Naithani

Mohit Naithani (Expert)
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24 July 2012 Any Capital gain on rural agriculture land is exempt from tax. Enhance compensation is also exempt. But The compensation awarded in the form of interest would be taxable as ‘income from other sources’ in the hands of the taxpayer.

Enhance compensation recv for urban land is taxable when it is actually recv by recipient. No Cost of Improvement and Cost of Acquisition is allow to deduct in it but Litigation expense are allow to deduct. Interest recv on enhance compensation for urban land is taxable as income from other sources in the hand of recipient.

Varun Arora

Varun Arora (Querist)
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24 July 2012 Thanks Mr Mohit Naithani for sharing.
please correlate section 10(37) with urban agriculture land case and suggest.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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29 July 2012 1) Not exempt from income tax under section 10(1) of the Income Tax Act,1961 as agricultural income being neither rent nor revenue derived from land used for agricultural purposes. Therefore, taxable under 'income from other sources' subject to deduction u/s 57(iv) of the said act.
2) Same treatment as above.

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