Compulsory land acquisition

The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax.

CIRCULAR NO.36/2016 [F.NO.225/88/2016-ITA.II], DATED 25-10-2016

 

charging section - 45(5) of IT Act 1961

compulsory acquisition falls within the ambit of tranfser - sec. 2(47)
Thus taxability shall arise under the head Capital gains.
If the land was held for upto 2 years then STCG shall arise.
Taxability shall arise in that F.Y. when the compensation is first received by the assessee.

I endorse the views of Dhiraj sir.. as per latest cbdt circular, transfers i.e. compulsory acquisition covered under rfctlaar act, will be exempted from tax irrespective of the nature of land i.e. agricultural or non-agricultural

thankyou all