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Capital Gains on Compensation of Compulsory Acquisition

Direct Taxation

Dear Sir, Mr.A Land worth Rs. 30 lakh was compulsorily acquired by Govt. He got a part of Compensation Receipt in Year 2022 = Rs. 10 lakh For this Rs. 10 lakh, Can we show Rs. 10 lakh - Indexed Cost = Long term Capital Loss Further, On receipt of Enhanced Compensation on further years, Can we Set off this Long term Capital loss to Enhanced compensation receipt. Please kindly clarify sir. Video Details P3A - Income Tax (New) Chp 4.4 - Capital Gains 16. S.45(5): Compulsory acquisition under any Law

Mamidi Vinisha

CA Inter

★ 970

27-Apr-24 12:19

Answers (1)

Even though he gets part of compensation, tax would be computed on entire compensation. Since as per Section 45(5), CG would arise in the year in which entire or any part is received. Even if part is received, CG would be computed on full amount of compensation.