Capital Gain Arising On Transfer Of Assets In Cases Of Shifting Of Industrial Undertaking From The Urban Area – Sec. 54G

SECTION 54G: CAPITAL GAIN ARISING ON TRANSFER OF ASSETS IN CASES OF SHIFTING OF INDUSTRIAL UNDERTAKING FROM THE URBAN AREA

SCOPETransfer of asset being plant, machinery, land & building by any assessee in cases of shifting of industrial undertaking from the urban areas to any other area
TYPE OF CAPITAL GAINAny capital gain – short-term or long-term
AMOUNT EXEMPTION OFIf capital gain < amount invested = full amount

If capital gain > amount invested = difference is taxable

In other words capital gain shall be exempt to the extent it is spent for the specified purpose

CONDITIONS
  • The transfer is effected in the course of shifting the undertaking from an urban area to any other area
  • The capital gain is utilised one year before or 3 years after date of transfer for the specified purpose which includes:-
  1. Purchased new plant/ machinery and
  2. Acquired building or land
  3. Shifted the original asset and transferred  the establishment to such area
  4. Incurred expenses on such other purposes as may be specified in scheme framed by Central Govt.
  • New undertaking should not be in urban area
  • The new asset should not be transferred within a period of 3 years from the date of its acquisition.
IF AMOUNT NOT UTILIZED TILL FILING OF RETURN U/S 139(1)Deposit in Nationalized bank under the capital Gains Deposit A/c scheme.
IF DEPOSIT NOT UTILISEDUnutilized amount taxable as LT or ST in the previous year in which three years from the date of transfer of original asset expires.
CONSEQUENCES OF TRANSFER BEFORE THREE YEARSThe capital gain, which was exempt earlier, shall be deducted from the cost of acquisition of the new asset for computation of capital gain in respect of transfer of new asset.

 

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