In case of compulsory acquisition of assets if the consideration is determined or is approved by Central Govt., or the Reserve Bank of India and later on such consideration is enhanced by the Court or Tribunal, the Capital Gain shall be treated in the following manner :
(a) the capital gain arising due to such acquisition shall be taxable in the previous year in which transfer takes place
(b) the enhanced compensation or consideration shall be chargeable to tax under the head “Capital Gains” of the previous year in which such amount is received by the assessee (or by any other person, if original transferor has died).
(c) With effect from 1-4-2004 in case an asset is taken over under compulsory acquisition and assessment has been made on the basis of original compensation or enhanced compensation and later on such compensation is reduced by any authority, the assessment shall be rectified by taking the reduced compensation. [Section 45(5)(c)]