Query regarding redevelopment of Property

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This discussion clarifies the tax treatment of payments received during property redevelopment. Hardship money from a developer is considered a capital receipt and is not taxable, though it should be recorded in a capital account in Tally. Rent received for alternate accommodation, especially when paid in advance, is taxable on a pro-rata basis under the Income from Other Sources (IFOS) head if not used for another property.

Dimpy

Dimpy (Querist)
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01 March 2022 Please help me with the following matters
1. Hardship money received from developer in case of redevelopment is taxable or not? Also how to record the same in tally?
2. Rent received for alternate accommodation in advance taxable or not? Also if taxable under which head? Income from House property or IFOS? (Rent received from developer is not spent on any other alternate property)

Thanks in advance

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 March 2022 1. Not taxable..... Hardship allowance from developer is a capital receipt: ITAT Indore
2. Taxable u/h. IFOS, if not spent for alternative accommodation.

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Dimpy

Dimpy (Querist)
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01 March 2022 1. Please let me know the Tally entry for the point 1
2. Rent received (advance for 2 years) entirely would be taxable or on pro rata basis?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 March 2022 1. Open a ledger under capital account, as "hardship allowance receipts" and credit the amount to it as and when received.
2. Its taxable on pro-rata basis.

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