Land acquisition relief taxable

SC Vasudeva

My query is regarding tax on compensation received against agricultural land acquired by HUDA for commercial use. My details are as under:

• My land was never used as cultivated land.
• It is situated within the municipal limit.
• Compensation was fixed by Land Acquisition Officer, Hisar and subsequently enhanced by District Judge, High Court and the Supreme Court. Is deduction of tax justified and if not, whom should I refer to for refund?

— Vijay Kumar

It transpires from the query that the agricultural land owned by you has not been used for the purpose of carrying out agricultural activity by you or by your parents in the preceding two years of the date of compulsory acquisition. The agricultural land being situated within the municipal limit, you would be liable to pay tax on the amount of capital gain arising on account of compulsory acquisition by the state government. The amount of capital gain would be computed in accordance with the provisions of Section 45(5) of the Act. The amount of tax deducted at source would be adjustable against the amount of tax payable by you. The issue of refund would arise only if the amount of tax payable is less than the tax deducted at source, reflection of which would be evident from the income-tax return required to be filed by you.

According to the recent clarification by the Central Board of Direct Taxes, refund will be granted online and credited to your bank account directly provided tax deducted  at source is reflected in Form 26AS. Please ensure that the tax has been deposited by the deductor and the requisite return relating to TDS has been filed by the deductor. This will ensure that the amount of tax deducted at source is reflected in Form 26AS.

My query is with reference to your advice appeared on dated March 27, 2017 in which it was replied that a deduction of Rs 5,000 is allowable under Section 80D of the Income-tax Act 1961, when a person has to incur expenditure on preventive health check-up.  I am a patient of ‘acute pancreatitis’ and getting treatment from the PGIMER, Chandigarh. My doctor had recommended an MRI test in connection with my abovesaid illness and an expenditure of Rs 2,500 was incurred in the ongoing financial year. I am a government employee and working in Chandigarh Administration. Can I claim a deduction of Rs 2,500 under Section 80D of Income-tax Act, 1961?  Please advise.

— Gurjinder Singh

The term ‘preventive’ has not been defined by the Income-tax Act, 1961 (The Act). The Oxford Dictionary defines the word ‘preventive’ as “designed to prevent something”.  Therefore, if the expenditure incurred for the MRI is to prevent any disease which can be ascertained by performing the said procedure, it may be possible to claim deduction of Rs 2,500 under Section 80D of the Income-tax Act, 1961 (The Act).  Further, in case the test had been carried out to prevent any damage to your pancreatitis, it may also be possible to claim the deduction for such expenditure under the aforesaid section.