Section 54GA of Income Tax Act "Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area to any Special Economic Zone"
54GA. (1) Notwithstanding anything contained in section
54G, where the capital gain arises from the transfer of a
capital asset, being machinery or plant or building or land
or any rights in building or land used for the purposes of
the business of an industrial undertaking situate in an
urban area, effected in the course of, or in consequence of
the shifting of such industrial undertaking to any Special
Economic Zone, whether developed in any urban area or any
other area and the assessee has within a period of one year
before or three years after the date on which the transfer
took place,-
(a) purchased machinery or plant for the purposes of
business of the industrial undertaking in the Special
Economic Zone to which the said undertaking is shifted;
(b) acquired building or land or constructed building for
the purposes of his business in the Special Economic Zone;
(c) shifted the original asset and transferred the
establishment of such undertaking to the Special Economic
Zone; and
(d) incurred expenses on such other purposes as may be
specified in a scheme framed by the Central Government for
the purposes of this section,
then, instead of the capital gain being charged to
income-tax as income of the previous year in which the
transfer took place, it shall, subject to the provisions of
sub-section (2), 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 and expenses incurred in relation to all or any of the
purposes mentioned in clauses (a) to (d) (such cost and
expenses 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 being purchased, acquired, constructed or
transferred, 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 being purchased, acquired, constructed or transferred,
as the case may be, the cost shall be reduced by the amount
of the capital gain.
Explanation.-In this sub-section,-
(a) "Special Economic Zone" shall have the meaning assigned
to it in clause (za) of 3[section 2 of] the Special Economic
Zones Act, 2005;
(b) "urban area" means any such area within the limits of a
municipal corporation or municipality as the Central
Government 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 purposes of this
sub-section.
(2) The amount of capital gain which is not appropriated by
the assessee towards the cost and expenses incurred in
relation to all or any of the purposes mentioned in clauses
(a) to (d) of sub-section (1) within one year before the
date on which the transfer of the original asset took place,
or which is not utilised by him for all or any of the
purposes aforesaid 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, 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 all or any of the aforesaid
purposes 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 all or any of the
purposes mentioned in clauses (a) to (d) of sub-section (1)
within the period specified in that sub-section, 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.