Hardship compensation recd from builder (redevelopment) shown as sale of land and building

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Sanjit

not applicable

94 Points Posted on 14 August 2025

On acccount of my redevelopment certain lump sums of money was received by me as rent, part of corpus amount, shifting charges and brokerage ALL STEMMING FROM MY CONTRACT OF REDEVELOPMENT with the builder. In my AIS/TIS these have been shown under Sale of land and Building and some amounts under business income.

I am given to understand that these amounts receivable are in the nature of compensation for hardship and corpus receipts are capital recceipts and hence they are not within the purview of my income of the financial year. TDS has been cut on the amounts received.

My question: How do i handle this in my ITR declaration and communcate to the authorities that the bulk of the amounts received ARE NOT SALE OF LAND and BUILDING and that other mounts ARE NOT RECEIPTS FROM BUSINESS67BA

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Quick Summary

This discussion concerns how to correctly declare hardship compensation, rent, corpus amounts, shifting charges, and brokerage received from a builder during a redevelopment project. These sums have been incorrectly shown as 'Sale of land and Building' or 'business income' in the AIS/TIS. The user seeks guidance on accurately reporting these as capital receipts and compensation for hardship in their Income Tax Return (ITR), ensuring they are not taxed as income for the financial year.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 14 August 2025

You should classify the receipts correctly. Given that the amounts are in the nature of compensation for hardship and corpus receipts are capital receipts, ensure these are not treated as income for the financial year.

Disclosure in ITR: In your Income Tax Return (ITR), you need to disclose these amounts appropriately, highlighting they are capital receipts and not part of your business income or sale of land and building.

When communicating to the tax authorities, emphasize that these amounts stem from your contract of redevelopment with the builder and are not sale proceeds of land/building or business income. You may need to provivde details of the redevelopment contract to support your claim.