Capital gain on transfer of assets in cases of shifting of Industrial Undertakings from urban areas - (New) Section 87 / (Old) Section 54G

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.... used for the business of an industrial undertaking; • situated in an urban area; and • transferred because the undertaking is being shifted to a non-urban area. The transferred asset is referred to as the "original asset." Clause (b): Eligible Reinvestment The assessee must, within: • 1 year before, or • 3 years after the date of transfer, undertake one or more of the following activities: • (i) Purchase of New Plant and Machinery - Acquire new machinery or plant for the undertaking in the new area. • (ii) Acquisition or Construction of Business Premises -  Purchase land/building or construct a building for the business in the new area....

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.... Deposit of Unutilised Capital Gains under Capital Gains Deposit Scheme [ Section 87(2) to (4) ] Where capital gain has not been fully utilized: • before the date of transfer (within the permitted one-year backward period), or • before filing the return under section 263. The unutilized amount must be deposited in: • a specified bank, or • a specified institution, under a scheme notified by the Central Government. The deposit must be made: • before filing the return; and • not later than the due date under section 263(1). Taxability of Unutilised Deposited Amount After Expiry of Three Years Clause (a) • If the deposited amount remain....

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.... urban area the shifting of such industrial undertaking (hereafter in this section referred to as the original asset) to any area (other than an urban area) Time Limit for Reinvestment the assessee has within a period of one year before or three years after the date of transfer • (a) purchased new machinery or plant for the purposes 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 purposes 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 purpo....

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....emed cost of New Asset For purposes of Section 54G: Cost of New Asset = Amount already utilized + Amount deposited under CGAS. Taxability of Unutilised Deposited Amount • If the deposited amount is not utilized for the specified purposes within 3 years from the date of transfer: • The unutilized amount becomes taxable as capital gains under Section 45 in the year in which the 3-year period expires. • After taxation of the unutilized amount: • The assessee becomes entitled to withdraw the balance amount from the deposit account according to the scheme. Quantum of Deduction (a) Partial Exemption where capital gain is greater than the new cost of asset then exempti....