Any interest you receive after you've invested your compensation might be taxable, and you'll need to declare it on any tax return. (Republished with Amendments by Team Taxguru). But in such cases, it is compensation for a product that isn’t working and, therefore, is capital receipt. No, your compensation and damages settlement payment or award is not taxable. This compensation is taxed as part of profits. 12-2016), if you receive other forms of compensation through a personal injury lawsuit, those funds could be subject to taxation. But ‘interest’ will attract tax, as it makes good the loss a person incurs. ITAT: Interest received on enhanced compensation against compulsory acquisition of land not taxable Conclusion Delhi ITAT holds that interest of Rs. in case of motor vehicle accident). All Rights Reserved. Such interest income includes: (a) Interest charged due to delay in payment of trade debt Example 1 The receipt being in the nature of income is a condition precedent for Section 56 coming into play, and not vice versa. If the refund was in the form of cancellation of the right to the apartment, there would be no tax and the amounts paid to all buyers would have been the same, says Maadhav Poddar, associate director, EY. Section 2(24) defines ‘Income’. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. Last Updated at August 4, 2014 22:35 IST. Compensation received for sexual harassment not taxable Sushmita Sen v. CIT, Income Tax Appeal No. When these provisions were introduced, the Memorandum explaining the provisions of the Finance Bill 2009 had this to say: ‘’Rationalization of provisions for taxation of interest received on delayed compensation or enhanced compensation. After considering the detailed reply of the assessee, the Pr. The two towers had a total of 857 apartments, of which 600 were sold. (viii) income by way of interest received on compensation or enhanced compensation referred to in clause (b) of Section 145A”. 'Finance Companies' for the list of licensed finance companies. Kindly visit the Manage my subscription page to discover the benefits of this programme. Maintained by, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Taxability of Interest on Compensation or Enhanced Compensation, Interest Granted Under Statutory Provisions, Granted By Courts, Scope of Supply under GST post Amendment made wef 01.02.2019, GST Registration – Confusions And Challenges, Analysis of Doctrine of Noscitur A Sociis In Taxation, Section 292B covers Mere wrong Mention of PAN in section 148 notice, All About Provision of Section 56(2)(X) of Income Tax Act, 1961, Section 115JB applies to banking companies after 2012 amendment, Higher profit rate cannot be estimated merely based on suspicion & conjectures, Breifing QRMP Scheme and benefit for Small Business, No Section 195 TDS on Payment for software licence to non-resident, Extend due dates for Income Tax Audit & Returns for AY 2020-21, Join Online Certification Courses on GST covering recent changes, Extend Income Tax Audit & ITR Due dates for AY 2020-21, ICAI requests FM to extend Income Tax due dates immediately, Extend due dates of GSTR-9/GSTR-9C for FY 2018-19 & 2019-20, Extend Income Tax, GST, LLP, Company Law due dates, Summary of Important GST Changes Applicable From 01.01.2021, Extend due dates of CFSS, LLPSS, Charge Forms, Meetings.
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