AAFM Exam CWM_LEVEL_2 Topic 4 Question 74 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 74
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 Loreta at Apr 14, 2024, 12:12 AM

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Karl

6 months ago

I think A is the correct answer, as the compensation amount is taxable @ 10% with indexation benefit and enhanced compensation is exempt as per section 10(37).

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Vicky

6 months ago

I'm not sure about that. I think the answer might be D, as the agricultural land was acquired by the Bihar Government.

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Frank

6 months ago

I disagree, I believe the compensation amount should be taxable @ 20% without indexation benefit.

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Reena

7 months ago

I think the correct answer is C, as the compensation along with enhanced compensation should be exempt as per section 10(37).

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Jeniffer

7 months ago

I disagree, I think the answer is option A. The compensation amount should be taxable at 10% with indexation benefit.

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Viola

7 months ago

I also believe that option C is correct. The compensation amount should be exempt according to section 10(37).

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Miles

7 months ago

I think the answer is option C.

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Milly

8 months ago

Haha, yeah, that's the risk, isn't it? I feel like this is one of those questions where the right answer is going to be the one that's the most straightforward and logical.

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Ilene

8 months ago

Ah, I see what you mean. But I don't know, the wording in option C just seems more clear-cut to me. I'd hate to overthink this and end up getting it wrong.

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Yolande

8 months ago

Hmm, I'm not so sure about that. I think option B might be the way to go. The question states that the compensation is taxable, and the enhanced compensation is exempt, so that seems to fit the criteria.

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Leslie

7 months ago

I'm leaning towards option C, where both compensation and enhanced compensation are exempt.

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Meaghan

7 months ago

But wouldn't the compensation amount be taxable at 10% with indexation benefit?

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Jade

7 months ago

I think option B is the correct one.

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Danica

8 months ago

Agreed. I'm leaning towards option C, since it mentions the land being acquired by the government after March 2004, and that the enhanced compensation is also exempt. But I'm not 100% sure.

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Marvel

8 months ago

Yeah, me neither. But I think the key here is to look at the specific sections of the tax code that are mentioned, like 10(37). That's probably going to be the most important factor in determining the right answer.

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Catalina

8 months ago

Wow, this is a pretty complex question. I'm not sure I fully understand all the nuances of capital gains tax and acquisitions by the government.

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