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[Section 54D] : Capital Gains on Compulsory Acquisition Of Land And Buildings

 

Where the capital gain arises from the transfer by way of compulsory acquisition under any law, if a capital asset being land or building or any right in land or building forming part of an industrial undertaking, which was being used by assessee for two year preceding the previous year in which the asset was acquired for his own business and the assessee reinvests the capital gains from such a transfer in purchase of another land or building or right in land or building or constructs another building within 3 years after the transfer, the capital gain so invested is exempted from tax. If the amount invested is less than the capital gain earned, the balance shall be taxable.

The new asset so purchased cannot be sold or transferred within a period of 3 years from the date of transfer. If sold or transferred earlier, old exempted gain along with new capital gain will be taxable in the previous year in which new asset is transferred.

It can be summarised as follows :

1.         Land and building or any right in land and building compulsorily acquired under any law forming part of an industrial undertaking belonging to the assessee.

2.         Such land and building must have been used by the assessee for the purposes of the business of the said undertaking during the period of two years immediately preceding the date on which transferred or compulsory acquisition took place.

3.         The assessee must have constructed a building or purchased another piece of land by investing capital gain arising on the transfer of the asset within a period of 3 years from the date of such transfer.

4.         The land and building acquired by re-investing capital gain must be for the purposes of shifting or re-establishing the said undertaking or setting up another industrial undertaking.

Non-utilisation of Long Term Capital Gain before due date of filing of return [Section 54D(2)]

“The amount of the capital gain which is not utilised by the assessee for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under subsection (1) of section [139] in any account in any such bank or institution as may be specified and such return shall be accompanied by proof of such deposit. The amount already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset

If amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then

  1.  the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and

(ii)        the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.

 
More Topics ... @ ' Capital Gain'

Capital Gain , Capital Assets & Property for Computing Capital Gain
Types of Capital Assets for Computing ‘Capital Gain’
Types of Capital Gains for Computing ‘Capital Gain’
Computation Of ‘Period Of Holding
 Transfer Of A Capital Asset [Section-2(47)]
Transactions Not regarded as ‘Transfer’ [Section-47]

Capital Gain is Deemed to be the Income of the Previous Year
Amount Received from insurer [Section-45(1A)] for Computing Capital Gain
Transfer of Capital Assets by a person to firm, AOP or Body Of Individuals (BOI) [Section 45(3)] for Computing Capital Gain
 Enhancement of Compensation on Compulsory Acquisition of Assets [Section-45(5)] for Computing Capital Gain
Sale of units Purchased for Deduction U/s 80 CCB [Section-45(6)]
Distribution of Assets by A Company in Liquidation for Computing Capital Gain
Capital Gain on Purchase by A Company of its Own Shares or Other  Securities [Section 46A]
DEEMED CAPITAL GAIN [Section 47A]
Method of Computing Capital Gain [Section 48]
Expenses Disallowed u/s Section 48 for Computing Capital Gain
Cases in which the Indexation of Cost is not to be done while Calculating long Term Capital Gain
 Computation of Capital Gain in Case of Non-Residents [Sec. 48 Proviso 1 ]
Determination of Cost of Acquisition for Computing Capital Gain.
Taxation of Gain on ‘Slump Sale’ for Computing Capital Gain
Special Provision for full Value of Consideration in certain cases (Section 50C] for Computing Capital Gain
Treatment of Advance Money Received and Forfeited (Section-51] for Computing Capital Gain
Cost of Acquisition of Goodwill [Section-55(2)(a)] for Computing Capital Gain
Cost of Acquisition of Shares [Section 55 (2) (v)] for Computing   Capital Gain
Capital Gains Exempted u/s 10
Capital Gains—Exempted u/s 54
 Capital Gain on Transfer of Self-Cultivated Agricultural Land in Urban   Areas [ Section 54 B]
Capital Gains on Compulsory Acquisition Of Land And Buildings [Section 54D]
 Capital Gain on Transfer of any Long Term Capital Asset [Section-54EC]
Exemption of Capital Gain on Transfer Of Long-Term Capital Assets in case of Investment In Residential House [Section 54F]
Capital Gain on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas [Section 54G]
 Exemption of Capital Gain on transfer of assets in case of shifting of Industrial Undertaking from an urban area to any Special Economic Zone (SEZ) [Sec. 54GA]
Long term Capital Gain on Transfer of Residential Property if Net Consideration is Invested in the Equity Shares of an Eligible company [Section 54GB] [w.e.f. A.Y. 2013- 14 but upto A.Y. 201 7-1 8]
Reference to Valuation Officer [Section 55] towards Capital Gain
 TREATMENT OF CAPITAL LOSS [Section 74]
TAX ON CAPITAL GAINS

 
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