R/ READERS
I INVESTED 20 LACS TO BOOK A FLAT 3 YEARS AGO. HOWEVER, THE BUILDER/ CONSTRUCTION FAILED TO FULFILL THE CONTRACT AND PROVIDE THE POSSESSION ON TIME. DUE TO WHICH WE CANCELLED THE AGREEMENT AND MONEY WAS REFUNDED TO ME ALONG WITH INTEREST OF LAST 3 YEARS AMOUNTING TO 5 LACS IN CURRENT YEAR.
NOW MY SALARY + ACCUMULATED INTEREST INCOME COMES OUT TO 11 LACS WITH HUGE AMOUNT OF TAX.
CAN I CONSIDER INTEREST FOR ONLY CURRENT YEAR FOR FILING THE RETURN?
IF ANY ONE GOT BETTER IDEA PLEASE HELP
" I INVESTED 20 LACS TO BOOK A FLAT 3 YEARS AGO. ...."
Even though the interst income is assessed under Income from other sources, and there by no provision to save liable tax over it.
But based on your Agreement to sale & Cancellation deed (with time period more than 3 years),and based on criteria of "rights aquired in property/asset;" the gain can be treated as Long Term Capital Gains. For that, I request you to get the documents checked from your local CA, for its possibility.
Dear Sir,
We opted for the same solution
Transfer of rights Relinquishment or Extinguishment of assets or right therein ) being considered as Capital Asset chargeable to capital gains
Thankyou for confirming
Regards
Sending you recent Judgement:
Compensation received by flat owner from builder for hardship caused due to redevelopment of the building is a non-taxable receipt and has to be reduced from the cost of the flat. Amount received from builder to meet rental costs during the redevelopment is also not taxable as income
It is elementary that the connotation of income howsoever wide and exhaustive, take into account only such capital receipts are specifically taxable under the provisions of the Income tax Act. Section 2(24)(vi) provides that income includes “any capital gains chargeable under section 45”, and, thus, it is clear that a capital receipt simplicitor cannot be taken as income. Hon’ble Supreme Court in the case of Padmraje R. Kardambande vs CIT (195 ITR 877) has observed that “..,, we hold that the amounts received by the assessee during the financial years in question have to be regarded as capital receipts, and, therefore, (emphasis supplied by us), are not income within meaning of section 2(24) of the Income tax Act….” This clearly implies, as is the settled legal position in our understanding, that a capital receipt in principle is outside the scope of income chargeable to tax and a receipt cannot be taxed as income unless it is in the nature of revenue receipt or is brought within the ambit income by way of a specific provision in the Act
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