Capital gain on compulsory acquisition of land and buildings forming part of an industrial undertaking - (New) Section 84 / (Old) Section 54D

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....ust Belong to an Industrial Undertaking The asset should form part of an industrial undertaking owned by the assessee. Condition 3: Minimum Period of Use The land or building must have been used for the business of the industrial undertaking during the two years immediately preceding the date of transfer. Condition 4: Reinvestment Requirement Within three years from the date of compulsory acquisition, the assessee must: • Purchase another land or building; or • Purchase rights in another land or building; or • Construct another building. The new asset should be used for: • Shifting the undertaking; • Re-establishing the undertaking; or • Setting ....

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.... • If the deposited amount is not utilised within the prescribed three-year period, the exemption is withdrawn to that extent. • The amount remaining unutilised at the end of three years from the date of transfer: • Becomes taxable under Section 67; • Is taxed in the tax year in which the three-year period expires. • Once the unutilised amount becomes taxable: • The assessee may withdraw the balance amount from the deposit account; • Withdrawal shall be governed by the notified scheme. Deemed Cost of New Asset Formula  Cost of New Asset = Amount already spent on purchase/construction plus Amount deposited under the Capital Gains Dep....

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.... • If the new asset is sold within three years: • Cost of acquisition of the new asset will be taken as Nil. (b) Where Cost of New Asset Equals or Exceeds Capital Gain Then: • Entire capital gain is exempt. • No tax is payable under Section 67 at that stage. Further • If the new asset is sold within three years: • Cost of acquisition will be reduced by the amount of exempt capital gain. Capital Gains Accounts Scheme (CGAS) for Unutilised Capital Gains If the capital gain is not utilised before filing the return under Section 139(1): • The unutilised amount must be deposited in a specified account under the Capital Gains Accounts Scheme (C....