ITAT adjudicated a dispute concerning the tax treatment of ...
Hardship Compensation in Property Redevelopment Deemed Capital Receipt, Not Taxable Income Under Section 45
May 22, 2025
Case Laws Income Tax AT
ITAT adjudicated a dispute concerning the tax treatment of hardship compensation received by a housing society member during property redevelopment. The tribunal determined that the compensation constituted a capital receipt, not taxable as income. The compensation effectively reduces the asset's acquisition cost and will be considered during future capital gains calculations. Relying on precedent in Kunnama V Balakrishnan, the tribunal ruled in favor of the assessee, allowing the appeal and establishing that such compensation does not trigger immediate tax liability, but impacts future capital gains computation.
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