06/03/2019
Capital gain arising on transfer of assets in cases of shifting of industrial undertaking from urban area [Sec 54G] :-Section 54G provides exemption on transfer of assets in the case of shifting of industrial undertaking from an urban area.
CONDITIONS :- Exemption can be availed if the following conditions are satisfied:
• A capital asset (being plant, machinery, land or building or any right in land or building) used for the purpose of an industrial undertaking situated in an urban area is transferred. For this purpose “urban area' means any such area within the limits of a municipal corporation or municipality as the Central Govemment may, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, by general or special order, declare to be an urban area for the purpose of this section.
• The transfer is effected in the course of, or in consequence of, the shifting of such industrial undertaking (hereinafter referred to as the original asset) to any area other than an urban area.
• The assessee has within a period of 1 year before or 3 years after the date on which the transfer took Place:
a. purchased a new machinery or plant for the purpose of business of the industrial undertaking in the area to which the said undertaking is shifted ;
b. acquired building or land or constructed building for the purpose of his business in the said area ;
c. shifted the original asset and transferred the establishment of such undertaking to such area ; and
d. incurred expenses on such other purpose as may be specified in a scheme framed by the Central Government for the purpose of this section. .
AMOUNT OF EXEMPTION :- If the aforesaid conditions are satisfied, the capital gains will be as follows :
• If the amount of the capital gain is greater than the cost and expense incurred in relation to all or the purposes , the difference between the amount of the capltal gain and the cost of the new asset shall be Charged under section 45 as the income of the previous year and for the purpose of computing in respect of the new asset any capital gain arising from Its transfer than a perlod of 3 years of its being purchased acquired, constructed or transferred, as the case may be, the cost shall be nil.
• If the amount of the capital gain is equal to, or less than the cost of the new asset, the capital gain Shall not be charged under section 45; and for the purpose of computmg In respect of the new asset any capital gain arising from its transfer within a period of 3 years of its being purchased acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount of the capital gain.
SCHEME OF DEPOSIT :- Where the amount of capital gain is not appropriated or utilised by the assessee towards the new asset before the date for furnishing the return of income, it shall be deposited by him on or before the due date of furnishing the return of income, in the deposit account in any branch (except rural branch) of a public sector bank or IDBI Bank in accordance with the Capital Gains Accounts Scheme, 1988. The amount already utilised for the new asset together with the amount so deposited shall be deemed to be the amount utilised for the new asset. If the amount deposited is not utilised fully for the new asset within the stipulated period, then the amount not so utilised shall be treated as the capital gain of the previous year , which the period of 3 years from the date of transfer of the original asset expires. In such case the assessee ;shall be entitled to withdraw such amount in accordance with the aforesaid scheme.
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