Year of Taxability of Capital Gains


Year of Taxability of Capital Gains

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Income Tax
Year of taxability of capital gains when compensation is received in pursuance of an interim order of any Court, Tribunal or other authority (Proviso to section 45(5)(6)]

Year of taxability of capital gains when compensation is received in pursuance of an interim order of any Court, Tribunal or other authority (Proviso to section 45(5)(6)] [W.e.f. A.Y. 2015-16]

 

 

The existing provisions contained in section 45 provide for charging of any profits or gains arising from transfer of a capital asset. Section 45(5) provides for dealing with capital gains arising from transfer by way ocompulsory acquisition where the compensation is enhanced or further enhanced by the court, Tribunal or any other authority. Section 45(5)(6) provides that where the amount of compensation is enhanced or further enhanced by the court it shall be deemed to be the income chargeable of the previous year in which such amount is received by the assessee.

 

There is uncertainty about the year in which the amount of compensation received in pursuance of an interim order of the court is to be charged to tax, due to court orders.

 

Accordingly, a proviso has been inserted under section 45(5)(b) to provide that the amount of compensation received in pursuance of an interim order of the court, Tribunal or other authority shall be deemed to be income chargeable under the head 'Capital gains' in the previous year in which the final order of such court, Tribunal or other authority is made. back

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