Taxability and indexation on compensation given by builder

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Joginder Singh (Querist)
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30 April 2018 I bought a plot for building my residence from a Devwloper in 2007 and the plot was to be handed over by 30 June 2009. The Developer has not been ae to give possession of the plot for last 9 years. Now the builder has agreed to refund my payment along with Compensation .. 70 lakhs original plus 70 lakh compensation on account of loss incurred by me on various accounts such as land cost inflation, cost of construction, distress caused in last 9 years because of delays.
Now my question is.
1. Is income tax applicable on this compensation?
2. If yes, can I apply indexation based on CII?
3. Can I deduct any additional expenses that were incurred by me while agreement for this plot..Like broker fees, etc.?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 April 2018 First of all I congratulate for getting the amount back from the builder with compensation.

However, to give a proper reply of the query certain facts are required to be clarified from your side as regards the land documents entered into between you and the builder.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 April 2018 At the time of purchase and cancellation of the plot.

ND (Expert)
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30 April 2018 If you had only booked the plot with the builder which was to be allotted in future then the additional amount of compensation received will be taxable fully. No indexation benefit will be given and no additional claim will be adjusted against the additional amount of compensation.
However in case you had bought the plot and the registry was also done in your name but the possession was pending, in that case you can treat this additional amount received as capital receipts. Benefit of indexation will also be available apart from adjustments of additional expenses incurred.

Joginder Singh

Joginder Singh (Querist)
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30 April 2018 Allotment letter was given by builder after the complete payments were made. Allotment letter mentions the plot details. Registration was supposed to be done at the time of possession, which never happened.

ND (Expert)
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01 May 2018 In my view you can claim the benefit of indexation. However it might be disputed by the Income Tax Department.

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