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.
Since the compensation has been decided and paid as per Karnataka state highway act it cannot be covered under RFCTLARR as is rightly said by the officer and same is mentioned under section 96 of the said act. If they hadnt taken a note of this act then you cant claim it as exempt.
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Hello,
Sec 96 of RFCTLAAR Act allows exemption from levy of tax under Income Tax Act, in the case of any compensation or any agreement made under this Act. Since your compensation is received under the
Circular 36/2016 also speaks the same, clarified that compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961.
Therefore, in my opinion, compensation received under the Karnataka State Highway Act, would be taxable under the Income Tax Act.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Dear Sir,
Hope you are doing well !!
As per my understanding, it would be taxable.
