AAFM Exam CWM_LEVEL_2 Topic 7 Question 79 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 79
Topic #: 7

Section C (4 Mark)

Read the senario and answer to the question.

Mr. Adhikari bought agricultural land in Patna in 94-95 for 1.75 lakh. That land was vacant for last so many years. But due to establishing a ''Commercial Processing Zone'' the Bihar Government has issued a notice for compulsorily acquirement on 12/08/2003. In 2006 government has fixed compensation for Rs. 6.50 lakhs and acquired it on 09/01/2006. Rs. 2 lakh was received by Mr. Adhikari on 07/03/2006. Mr. Adhikari and others were not satisfied with the compensation and file a suit in the court.

Balance compensation paid by Bihar Government on 08/10/2008. The compensation is enhanced by another 1.50 lakhs by the Bihar Government which paid by the Government on 11/12/2008.Compute Capital Gain tax in the hands of Mr. Adhikari for the assessment year 2009--10.

AThe compensation amount is taxable @ 10 % with indexation benefit and enhanced compensation is exempt as per section 10(37)

BThe compensation amount is taxable @ 20 % without indexation benefit and enhanced compensation is exempt as per section 10(37).

CThe compensation amount along with enhanced compensation of Rs. 1.50 lakhs shall be exempt as per section 10(37) because the agricultural land was acquired by the Government and as compensation is received after 31/03/2004.

DCompensation is exempted because the agricultural land was acquired by the Bihar Government

Show Suggested Answer

Suggested Answer: C

by Ben at May 31, 2024, 05:47 PM

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My

8 months ago

I agree with Ivette. The question states that the land was compulsorily acquired by the government, so the compensation should be exempt under section 10(37). Piece of cake!

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Tammara

8 months ago

Hmm, this seems straightforward. The land was acquired by the government, so the compensation should be exempt. I wonder if there's a catch here that I'm missing.

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Verdell

8 months ago

I think option C makes sense. The exemption under section 10(37) should apply since the land was acquired by the government.

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Marion

8 months ago

C) The compensation amount along with enhanced compensation of Rs. 1.50 lakhs shall be exempt as per section 10(37) because the agricultural land was acquired by the Government and as compensation is received after 31/03/2004.

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Jesusa

8 months ago

A) The compensation amount is taxable @ 10 % with indexation benefit and enhanced compensation is exempt as per section 10(37)

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Kallie

9 months ago

I disagree, I believe the answer is C.

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Ivette

9 months ago

The correct answer is C. The compensation amount along with the enhanced compensation is exempt as per section 10(37) since the agricultural land was acquired by the government and the compensation was received after 31/03/2004.

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