Compulsary Acquisition of land By HDBRTS is exemption under capital gain

[Kalmesh Siddatagimath]

Sir, the assessee a partnership firm had received compensation from HDBRTS for compulsary acquisition of their property in the F.Y.- 2015-16. The assessing Officer has passed the order w.r.t the compensation amount in F.Y.- 2018-19, by adding compulsary acquisition amount under the head of Income from Capital Gain because the Land was acquired under section 15 of the Karnataka State Highway Act, 1964 and the compensation amount has been paid under section 27 of the Act, with land owner consent and compensation paid to the assessee by HDBRTS does not attract the provision of section 96 of the RECTLARR Act, 2013.Therefore the same is not eligible for exemption in accordance with CBDT Circular 303/2010, as claimed by the assessee.

Sir, kindly guide me whether the compensation amount awarded is exempt or not and the relevant section along with the case laws or recent judgements w.r.t the above issue.

[DR.MARIAPPAN GOVINDARAJAN]

In my view compensation amount would not attract capital gains tax.

[KASTURI SETHI]

Compensation is not an income. I have read this case law in the Tribune in the column of Q & A relating Income Tax.

[YAGAY andSUN]

We endorse the views of our experts that CG is not applicable on compulsory Acquisition of land under the provisions of Income Tax Act, 1961 as amended from time to time as it does not fit in the defintion of capital gain.

AI Summary

Compulsory land acquisition exemption: compensation for acquisition by statutory authority does not attract capital gains tax Whether compensation for compulsory acquisition of land constitutes capital gain is disputed: the assessing officer treated the payment as taxable capital gains because the acquisition occurred under a state statute and payment under its provision, rejecting the exemption claimed by the assessee; commentators and advisors recorded the view that such compulsory acquisition compensation does not amount to capital gain and is not chargeable as such.