Court case settlement amount received is taxable?

Dear sir, An HUF receives a sum of Rs.425000/- in the beginning of this financial year, of 30 yrs. old litigation this year through cheque as settlement amount through court. The basic amount was been shown since 30 yrs. Rs.115000/-in HUF Balance sheet (assets side). Since 30 yrs. no provision of interest was made on that litigation amount. What would be the tax implications for that as that HUF income is only interest income about 80000/- annually .. Kindly suggest ways to save income tax . Are there any investment plans to save the entire amount from taxation. kindly guide me. Also suggest some related articles/posts/ threads to read in this regard.

thanks.

shrenik kumar sancheti.

Replies (1)

The guiding factor to determine the taxability would be the decree of thecourt showing the breakup of the amount of Rs. 425000/- The interest and liquidated damages if any alone are taxable. Assuming the entire surplus is interest and/or liquidated damages then the taxability woudl be as under:

Amount receved :                                      425000

Less Receivable as per BS                        115000

Surplus being taxable                                 310000

Other interest income                                    80000

Total taxable income                                    390000

Les 80C investment                                      150000

Taxable income                                             240000

No Tax

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