The Tax Publishers2020 TaxPub(DT) 1181 (SC) : (2021) 276 TAXMAN 0190

INCOME TAX ACT, 1961

Section 261 Section 54G

Where the department preferred SLP to appeal against the judgment of Madras High Court in Intec Corporation v. Pr. CIT -11 [ITA No. 72/2019 & CM Appl. 3927-28/2019, dt. 28-1-2019] : 2019 TaxPub(DT) 1195 (Del-HC), whereby the High Court held that in terms of rule 71 of the Explosives Rules, 2008, a person holding licence for possession of explosives granted under these Rules should store the explosives only in the premises specified in the licence. One factor which AO lost sight of was manner in which the first limb of section 54G(1) is worded wherein the transfer of a capital asset includes machinery or plant or building or land or any rights in the building or land used for the purpose of business of an industrial undertaking situated in an urban area. However, where capital gains arising from transfer of capital asset, being machinery or plant or land or building used for the purposes of business of an industrial undertaking situated in an urban area effected in the course of or in consequence of the shifting of such industrial undertaking to any area other than an urban area, assessee was entitled to the benefit of deduction under section 54G, the Supreme Court dismissed the SLP.

Appeal (Supreme Court) - Special leave petition - Capital gains - Exemption under section 54G--Capital gain earned by assessee on sale of its godown situated in an urban area and which was relocated in a non-urban area

Department preferred SLP to appeal against the judgment of Madras High Court in Intec Corporation v. Pr. CIT -11 [ITA No. 72/2019 & CM Appl. 3927-28/2019, dt. 28-1-2019] : 2019 TaxPub(DT) 1195 (Del-HC), whereby the High Court held that in terms of rule 71 of the Explosives Rules, 2008, a person holding licence for possession of explosives granted under these Rules should store the explosives only in the premises specified in the licence. One factor which AO lost sight of was manner in which the first limb of section 54G(1) is worded wherein the transfer of a capital asset includes machinery or plant or building or land or any rights in the building or land used for the purpose of business of an industrial undertaking situated in an urban area. However, where capital gains arising from transfer of capital asset, being machinery or plant or land or building used for the purposes of business of an industrial undertaking situated in an urban area effected in the course of or in consequence of the shifting of such industrial undertaking to any area other than an urban area, assessee was entitled to the benefit of deduction under section 54G. Held: The Supreme Court dismissed the SLP.

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