Interest and compensation received on cancellation of property agreement- taxation

Hi All,

How will interest and compensation received on cancellation of property agreement be taxed? The agreement for purchase of property was entered into in 2017 and it is now cancelled paying rs 10 lakh as interest and compensation extra.

Will it be taxed under capital gains or income from other sources?

If under capital gains (sale of right to a property), then will section 54EC be availed (capital gain bonds) ?

If the cancellation agreement was worded differently would the taxation be different?



 

Replies (1)
In my opinion it should be taxed under Other Sources. As the sale of neither property nor rights materialised the receipt is purely in the nature of 'compensation for cancellation' and not 'compensation for sale'.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
21 October 2026
CA INTER/ BCOM WITH EXPERIENCE

CA S KUMAR GUPTA & CO

Amritsar

CA Inter

View Details
Company
Featured ARTICLESHIP 31 October 2026
CA Articleship

apricus india

Navi Mumbai

CA Inter

View Details
Company
15 October 2026
Senior Accountant

Continental Belting Pvt Ltd

Mumbai

B.Com

View Details
Company
ARTICLESHIP 29 October 2026
Article Assistant (CA Inter / CMA Inter) - Thrissur

Varma Raja & Associates

Thrissur

CA Inter

View Details
Company
Featured 07 November 2026
Paid Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
31 October 2026
Accountants

sankaran and krishnan

New Delhi

B.Com

View Details
Company
Featured 07 November 2026
Chartered Accountant

DPV & Associates

Chennai

CA

View Details