What is Payment of compensation on acquisition of capital asset? What is Payment of compensation on acquisition of certain immovable property? Section 194 L and 194 LA of Income Tax Act 1961

Payment of compensation on acquisition of capital asset and Payment of compensation on acquisition of certain immovable property are defined under section 194 L and 194LA of Income Tax Act 1961. Provisions under these Sections are :

Section 194L of Income Tax Act "Payment of compensation on acquisition of capital asset"

Section 194L. Any person responsible for paying to a resident any sum being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any capital asset shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax on income comprised therein :

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed one hundred thousand rupees:
Provided further that no deduction shall be made under this section from any payment made on or after the 1st day of June, 2000.

 

Section 194LA of Income Tax Act "Payment of compensation on acquisition of certain immovable property"

Section 194LA. Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon:

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed two hundred thousand rupees.

Explanation.-For the purposes of this section,-

(i) "agricultural land" means agricultural land in India including land situate in any area referred to in items

(a) and (b) of sub-clause (iii) of clause (14) of section 2;

(ii) "immovable property" means any land (other than agricultural land) or any building or part of a building.

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