Capital gain

Hi Fnds 

I have a doubt, I want to Share with You,

Q. I had a Land purchased in 2005 at a cost of Rs.2,20,000.

in jun 2013 Govt has taken My land in the nature of Compulsary Acqusition. 

I have received From Govt 3,00,000/-

I filed a case in Court and court sentenced that i will get 1,45,653 (Including 30000 interest)Above 3 lakh

How i will Do Tax Treatment..

Replies (4)

This 115653 is enhance compensation and it will be taxable in the year in which it is received.

So u need to calculate capital gain in the year in which capital assets has been transfered without considering enhanced compensation.

As per sec 45(5) capital gain by way of compulsory aquisition of an asset 

i hope you have already paid tax on 300000 , which is your original compensation in a.y 14-15 

Now 145653 is your enhanced/ additional compensation in which your cost is nil , if any legal expenses you can deduct from this amount without taking benefit of indexation 

Sales consideration = 145653

- cost                            = nil 

LTCG                              =145653

Interest on enhanced compensation is taxable under income from other sources in which straight for mardy 50 % deduction allowed.

Where as enhanced compensation is taxable in the year of receipts in which deduction allowed incurred for earning the same.

 

Thank you.

As per sec45(5) of the income tax act the capital gains on transfer by way of compulsory acquisition of an asset would be taxable taking into consideration such enhanced compensation in the previous year in which such conpensation is recd. hence, 145653 would be considered LTCG and would be taxable

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