Section 54D of Income Tax Act "Capital gain on compulsory acquisition of lands and buildings not to be charged in certain cases"
54D. (1) Subject to the provisions of sub-section (2),
where the capital gain arises from the transfer by way of
compulsory acquisition under any law of a capital asset,
being land or building or any right in land or building,
forming part of an industrial undertaking belonging to the
assessee which, in the two years immediately preceding the
date on which the transfer took place, was being used by the
assessee for the purposes of the business of the said
undertaking (hereafter in this section referred to as the
original asset), and the assessee has within a period of
three years after that date purchased any other land or
building or any right in any other land or building or
constructed any other building for the purposes of shifting
or re-establishing the said undertaking or setting up
another industrial undertaking, then, instead of the capital
gain being charged to income-tax as the income of the
previous year in which the transfer took place, it shall be
dealt with in accordance with the following provisions of
this section, that is to say,-
(i) if the amount of the capital gain is greater than the
cost of the land, building or right so purchased or the
building so constructed (such land, building or right being
hereafter in this section referred to as the new asset), the
difference between the amount of the capital 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 within a period of three years of
its purchase or construction, as the case may be, the cost
shall be nil; or
(ii) 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
computing in respect of the new asset any capital gain
arising from its transfer within a period of three years of
its purchase or construction, as the case may be, the cost
shall be reduced by the amount of the capital gain.
(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
sub-section (1) of section 139] in an account in any such
bank or institution as may be specified in, and utilised in
accordance with, any scheme which the Central Government
may, by notification in the Official Gazette, frame in this
behalf and such return shall be accompanied by proof of such
deposit; and, for the purposes of sub-section (1), the
amount, if any, 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:
Provided that if the 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,-
(i) 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.
Explanation.-[Omitted by the Finance Act, 1992, w.e.f.
1-4-1993.]