Capital gains on insurance compensation arise when a destroyed capital asset is covered by specified contingencies and paid out by insurer. Insurance compensation received for damage or destruction of a capital asset is chargeable as capital gains only where the loss results from specified events such as natural calamity, riot, accidental fire or explosion, or enemy action. The insurance money or the fair market value of any asset received is treated as the full value of consideration, and the gain is taxed in the year of receipt. If no claim is received, no capital gain arises; stock-in-trade is excluded from this treatment.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Capital gains on insurance compensation arise when a destroyed capital asset is covered by specified contingencies and paid out by insurer.
Insurance compensation received for damage or destruction of a capital asset is chargeable as capital gains only where the loss results from specified events such as natural calamity, riot, accidental fire or explosion, or enemy action. The insurance money or the fair market value of any asset received is treated as the full value of consideration, and the gain is taxed in the year of receipt. If no claim is received, no capital gain arises; stock-in-trade is excluded from this treatment.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
