Question ID :
44684
Compensation received from Developer for Delay in Giving Possession of Flats to Land Owner
One of the client has received amount of Rs.25,27,000 during FY 2023-24 towards compensation for Delay in Giving Possession of Flats to Land Owner towards his share of Flats as per Development Agreement. Developer has deducted TDS under sectoin 194I(b) from the said payment. Delay payment was for the period from FY 2019-20 till FY 2023-24. Whether the amount of Rs.25,27,000 is taxable? If Yes under which head? If No, under what section exemption can be claimed?.Please advise..
Posted by
CA Ravish Thakur
on
Jul 11, 2024
Filed Under
DIRECT TAXES
The amount of Rs. 25,27,000 received as compensation for the delay in giving possession of flats is taxable under the head "Income from Other Sources", or potentially under "Income from House Property", depending on the specifics of the agreement. The TDS deducted under Section 194I(b) suggests that the payment is treated as rent for the use of property, which is taxable. There is no specific exemption for such compensation under the Income Tax Act unless a particular exemption applies, so the amount is subject to tax in the relevant financial year.
Posted by
SACHIN KUMAR RAI on
May 12, 2025