Compensation received under an award passed by the Land ...

Compensation for compulsory land acquisition is tax-exempt under the Right to Fair Compensation Act, not subject to income tax.

August 17, 2024

Case Laws     Income Tax     HC

Compensation received under an award passed by the Land Acquisition Officer u/s 24(1) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is not exigible to income tax under the Income Tax Act, 1961. Section 10(37) of the Income Tax Act, 1961 exempts income arising from the transfer of agricultural land by way of compulsory acquisition from capital gains tax. Circular No. 36 of 2016 issued by the Ministry of Finance clarifies that compensation received for compulsory acquisition of agricultural or non-agricultural land is exempted from income tax u/s 96 of the Land Acquisition Act, 2013, except for the amount received u/s 46. The High Court dismissed the petition as infructuous, finding no assessment order or demand notice issued by the Income Tax Authority against the petitioner.

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