AAFM CWM_LEVEL_2 Exam - Topic 4 Question 70 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 70
Topic #: 4

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 Jess at Jan 23, 2024, 08:07 PM

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Stefany

4 months ago

Not sure about that, can we really trust the government on this?

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Kina

4 months ago

Definitely option C, the land was acquired after 2004!

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Nobuko

4 months ago

Wait, is enhanced compensation really exempt? That seems off.

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Alpha

4 months ago

I think it's option A, 10% with indexation benefits!

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Julie

4 months ago

The compensation amount is taxable @ 20% without indexation, right?

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Sonia

5 months ago

I feel like the compensation should be taxable, but I’m not certain if it’s at 10% or 20%. I need to double-check the indexation rules.

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Melodie

5 months ago

I practiced a similar question where the compensation was fully exempt, so I’m leaning towards option C, but I’m still a bit confused about the dates.

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Gaynell

5 months ago

I think the enhanced compensation should be exempt, but I can't recall if the original compensation is taxable or not.

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Shenika

5 months ago

I remember that section 10(37) deals with compensation for agricultural land, but I'm not sure about the indexation part.

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Loreta

5 months ago

Okay, let me break this down step-by-step. First, I need to calculate the capital gains based on the purchase price and the compensation received. Then, I'll need to determine if any part of the compensation is exempt under the relevant tax provisions. This will require careful analysis of the facts presented.

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Beckie

5 months ago

The key here is to identify whether the compensation received qualifies for exemption under Section 10(37). If so, then the entire amount would be exempt from tax. I'll need to double-check the conditions for this exemption.

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Donte

5 months ago

This looks like a straightforward capital gains tax calculation question. I'll need to carefully review the details provided to determine the correct tax treatment of the compensation received.

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Sarah

5 months ago

Hmm, I'm a bit unsure about how to approach this. There seem to be a lot of dates and amounts involved. I'll need to make sure I understand the timeline and the relevant tax provisions before attempting to solve this.

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Lindsey

5 months ago

This looks like a straightforward question about page naming conventions. I'll carefully review the options and think about best practices for page names.

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Sena

5 months ago

Got it, the total count is the overall number of transactions, while the other metrics are just tracking subsets of that, like distributed transactions only. I'll select option C for this one.

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