10-mark question · Part C · Law of Taxation

The assessee is the owner of an old flat built in 1979. There are 12 flats and all flat owners decided to hand over their flats for redevelopment. The builder agreed to hand over a new flat along with a compensation of Rs. 10 lakhs to each flat owner and retain the rest of the flats. Is the compensation taxable or not? What will be the tax liability for the exchange of new flat for the old one? If the assessee is liable for any tax, advise your client how to avoid the tax liability.

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• Law of Taxation · May/June 2014 Mapped paper Download

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