Chargiability of amount received for vacating the premises, Income Tax

[Sujit Talukder]

Amount received from shop owner by the shop tenant for vacating the premises is chargeable to income tax?If yes, how?Please clarify.

Posts / Replies

[Brijesh Verma]

Dear Sujit Ji This transaction amounts to 'Transfer' under section 2(47)(ii) of the Income Tax Act as there is a 'EXTINGUISHMENT OF ANY RIGHT THEREIN'. The amount may well be subjected to Capital Gain Tax.

[Sujit Talukder]

Many many thanks for the reply.One more thing which I need to clarify as there is no amount involed which can be classified as Cost of Acquisition,can the rent pad to landlord be treated as Cost of acquisition/improvemnet or the entire amount will be taxable as Capital gain?