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AAFM CWM_LEVEL_2 Exam - Topic 5 Question 6 Discussion

Section C (4 Mark)Read the senario and answer to the question.Saxena bought agricultural land in notified urban limits of Mumbai on 15-June-1996 for Rs. 6 lakh and had been using the same for agricultural purposes. However the land was compulsorily acquired by the Government on 15-July-2003 and the compensation fixed was Rs. 25 lakh. Out of this, Rs 10 lakh was received by Saxena on 15-Jan-2005 and the balance on 06-Apr-2005. Saxena was not satisfied with the compensation and filed a suit in the court. The compensation was enhanced by Rs 8 lakh which was received on 25-Mar-2008. Which one of the following statement regarding capital gains arising from these transactions is correct:
B) The entire enhanced compensation of Rs. 8 Lakh shall be exempt.
A) The entire enhanced compensation of Rs. 8 Lakh shall be taxable.
C) The entire original compensation of Rs. 25 Lakh shall be exempt.
D) Rs. 10 lakh from original compensation is exempt, while Rs. 15 lakh is taxable.

AAFM CWM_LEVEL_2 Exam - Topic 5 Question 6 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam
Question #: 6
Topic #: 5
[All CWM_LEVEL_2 Questions]

Section C (4 Mark)

Read the senario and answer to the question.

Saxena bought agricultural land in notified urban limits of Mumbai on 15-June-1996 for Rs. 6 lakh and had been using the same for agricultural purposes. However the land was compulsorily acquired by the Government on 15-July-2003 and the compensation fixed was Rs. 25 lakh. Out of this, Rs 10 lakh was received by Saxena on 15-Jan-2005 and the balance on 06-Apr-2005. Saxena was not satisfied with the compensation and filed a suit in the court. The compensation was enhanced by Rs 8 lakh which was received on 25-Mar-2008. Which one of the following statement regarding capital gains arising from these transactions is correct:

Show Suggested Answer Hide Answer
Suggested Answer: B

by Gayla at May 07, 2022, 04:32 AM

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Lilli
7 months ago
This whole compensation thing seems confusing, not sure about the tax implications.
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Han
8 months ago
Wait, is it really true that part of the original compensation is exempt?
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Weldon
8 months ago
Definitely leaning towards option D here.
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Kenda
8 months ago
I think the enhanced Rs. 8 lakh is taxable, not exempt.
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Herminia
8 months ago
The original compensation of Rs. 25 lakh is exempt, right?
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Anissa
8 months ago
Sending custom headers with RestTemplate? I think I remember seeing that in the documentation, but I'll need to review that part again to be sure.
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Rozella
9 months ago
This looks like a capital gains tax scenario with compulsory land acquisition. Need to carefully track the dates and compensation amounts.
upvoted 0 times
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