Booked a flat with a builder in 2010 and he failed to deliver the flat and offered possession after 6-7 years. We had approached the NCDRC and we opted for refund and NCDRC ordered in 2018, Refund of the entire amount with compensation in the form of simple interest @11 (compensation in the form of simple interest ). Is the interest part which is as compensation in this case taxable. We have again approached the NCDRC since builder has deducted TDS under section 194A1. We have not yet filed returns for 18-19 since we are in court and we want him to refund the TDS deducted wrongly with interest @ 11% from the date of the last payment made to the builder. Is My last date for filling 18-19 return is 31st of June or has it been extended or can it be delayed because of lock down or NCDRC case. If I file return and do not claim refund, can the refund be claimed later. Relevant portion from final NCDRC order For the reasons stated hereinabove, the complaint is disposed of with the following directions: (i) The OP i.e. M3M India Limited shall refund the entire principal amount of Rs.2,74,79,831.48p, to the complainant along with compensation in the form of simple interest @ 11% per annum from the date of each payment till the date of refund. (ii) The OP i.e. M3M India Limited shall pay a sum of Rs.25,000/- as the cost of litigation to the complainant. (iii) The payment in terms of this order shall be made within three months from today SOM BAKSHI [deleted]
Well if the TDS was deducted when you made the payments then while refunding TDS is to be returned and not to be deducted once again.
Since the amount to be refunded is clearly mentioned by NCDRC , the builder can not deduct any sum even on statutory front.
This amount is not taxable beyond what you are liable to be taxed in your annual returns.
According to the Income tax act, revenue receipts are taxable and capital receipts are not taxable.
2)If the compensation is in the nature of interest, then it is clearly taxable.
3)you can argue that compensation is for hardship caused due to the delay In delivery of possession and hence not taxable
4) filing of return would be extended due to lock down
You can do the same by pointing out the said order to IT authority
- As per rule , the compensation received from builder under settlement for failure to give possession of flat within stipulated time and through court order , held not capital receipts nor interest, hence taxable
- After filing the return 18-19 , you can claim refund of the deducted TDS amount , even late filing due to lockdown.
- Further, if you file return and not claim , then in the next years return , you can claim the same.
The interest to be paid by the builder as per the order of the NCDRC shall attract applicable income tax until and unless specifically exempted by court in it order.
The claim for refund can be made subsequent to the filing of the ITR also but remember that it should be reflected in the IT returns that you would be filing now.
1. Compensation or Interest received in any form is taxable and TDS is liable to be deducted. Check online whether deducted TDS is actually deposited in your IT Account.
2. TDS can be claimed upto Six years, by filing proper application with the help of a local CA.
3. ITR filing is extended upto 30 September.
1. Compensation awarded in the form of interest, even under a court order unless ordered by the court to be exempted from taxation, is taxable.
2. However, nothing prevents you from taking the plea that this compensation is on account of mental agony suffered by you, hence it should not be taxed,
Only amounts representing income are taxable capital receipts are not taxable..
The amount of compensation not being in the nature of income should not be taxable as the same is not in the nature of an income.
Dear Sir,
You may file the ITR in the year 2020 till September 30.
1. You should file your return and claim refund of TDS on interest which is deducted by builder.
2. Builder can deduct TDs over interest paid by him to you and if you file return mentioning deductions of TDs by builder then it will bound builder to deposit TDs with income tax department.
