Hi
I just wanted to ask that if a person (not being a tenant) receives compensation from the owner of the house to vacate the house, whether that compensation will be a capital receipt in the hands of the receiver.?
Rupali
Rupali Birla (Partner) (29 Points)
27 December 2011Hi
I just wanted to ask that if a person (not being a tenant) receives compensation from the owner of the house to vacate the house, whether that compensation will be a capital receipt in the hands of the receiver.?
Rupali
CA Navin Jain
(MANAGER (FINANCE & ACCOUNTS))
(11768 Points)
Replied 27 December 2011
the entire amount would be liable to tax at 20 per cent with eligibility for the benefits of Sec. 54F or 54EC, if it is possible to reinvest the amount either in a residential house property or bonds, subject to the conditions thereunder.
Rupali Birla
(Partner)
(29 Points)
Replied 27 December 2011
Thanx Mr Naveen .But can you please refer any case law for this.
Dhruv Gaglani
(Learning)
(278 Points)
Replied 05 January 2012
Madam,
Kindly clarify as to in what position was the person occupying the house if he was not a tenant. And if he was not a tenant, then the owner was not liable to give him any compensation for vacating the property. The fact that the owner had to pay out cmpensation, indicates that the person occupying the property had tenancy rights. And compensation for sale of tenancy rights is a capital receipt.
Even if the person has occupied possession illegally, the owner cannot dispossess him from the property, even though he is the owner as per the Specific Relief Act. In this case I think that the possessor of the property automatically assumes tenancy rights.
However clarification regarding the nature of occupancy will be helpful.
CAclubindia
