How much percent of income by way of interest received on compensation or on enhanced compensation is allowed as deduction while computing income under the head Income from Other Sources under the Income-tax Act, 1961?

Correct option is B

Under Section 57(iv) of the Income-tax Act, 1961, a deduction of 50% is allowed on the income by way of interest received on compensation or enhanced compensation while computing income under the head "Income from Other Sources."
This deduction is provided to account for the expenses or hardships associated with the delay in receiving compensation or enhanced compensation.
Information Booster
1. Key Features of Section 57(iv):
· Deduction is applicable only on the interest portion of the compensation.
· It does not cover the principal amount of compensation.
2. Examples of Interest on Compensation:
· Interest received on delayed land acquisition compensation.
· Interest on enhanced compensation awarded by a court.
Additional Knowledge
1. Taxability of Compensation and Interest:
· The principal amount of compensation is taxable under "Capital Gains" or other relevant heads.
· Interest income is taxable under "Income from Other Sources," but a 50% deduction is allowed.
2. Documentation Requirement:
· The recipient must maintain records of the compensation and interest for claiming deductions.