Tax calculation on compensation received for agricultural land
This query is related to land acquired by Bihar government from my father 25-30 years back to create a colony for refuge who had come from Burma country. Thus was agriculture land and it doesn't come any municipal area. The compensation was paid at that time; however my father and other affected parties had filed the case in the lower court arguing that compensation was not adequate as it was very fertile land. After many years of legal battle the district court gave verdict in our favour and asked the state government to pay 50 lac as compensation. This was challenged by state government in Patna High court. The high court accepted the petition, but asked the state government to pay the compensation as directed by lower court. The matter is still pending in high court but state government paid 50 lac to my father as per high court order on adhoc basis. My father deposited this amount in fixed deposit. The bank is deducting TDS on this FD every year; however my father is not showing this as his income while filing income tax return thinking that he is not the real owner of money. Tomorrow if Patna high court gives decision which goes against him, he will have to return back the money with interest. My question is, from taxation point of view , what is the best way to deal it?
Asked 2 years ago in Taxation from Saharsa, Bihar
Since the bank is deducting TDS on the FD every year, it should have been reflected in the income tax return with an explanation towards it. Whatever amount if is to be paid back to the government later on, an application against settling the taxed amount towards the interest can be made for it.
Further, you need to clarify from a practising CA who can give you a better guidance as the question posed by you is very technical in nature and requires an advice from a CA.