Section 16 - Insertion of new section 54A - Direct Tax Laws (Amendment) Act, 1987

16. Insertion of new section 54A. After section 54 of the Income-tax Act, the following section shall be inserted namely :- 54A. Relief of tax on capital gains on transfer of property held under trust for charitable or religious purposes or by certain Institutions. (1) Where the capital gain arises from the transfer of a long term capital asset, being property specified in sub-section (2) (the capital asset so transferred being hereafter in this section referred to as the original asset), and the assessee has, during the previous year in which the transfer took place or within a period of six months after the close of such previous year, acquired another capital asset (such asset being hereafter in this section referred to as the new asset), to be held for the same purposes as those for which the original asset was held, then, the capital gain arising from the transfer shall be dealt with in accordance with the following provisions, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital main shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset. so much of the capital gain as hears to the whole of the capital gain the same proportion as the cost of acquisition of the new asset bears to the net consideration shall not be charged under section 45; Provided that in a case where the transfer of the original asset is by way of compulsory acquisition under any law and the full amount of compensation awarded for such acquisition is not received by the assessee on the date of such transfer but is received after the expiry of the previous year, the period of six months referred to in this section shall, in relation to so much of such compensation as is not received before such expiry, be reckoned from the date immediately following the date on which such compensation is received by the assessee. (2) The property referred to in sub-section (1) shall be the following, namely :- (a) property held under trust wholly for charitable or religious purposes in India or by an institution established wholly for such purposes in India; (b) property held under trust in part only for charitable or religious purposes in India, the trust having been created before the commencement of this Act; (c) property held under a trust created on or after the 1st day of April, 1952, or by an institution established on or after that date, for a charitable purpose which is for the benefit of citizens of India abroad or which tends to promote international welfare in which India is interested; (d) property held by a trust or institution of national importance referred to in clause (d) of sub-section (1) of section 80F. (3) In the case of a capital asset being property falling under clause (b) of sub-section (2), the provisions of sub-section (1) shall apply only to that fraction of the capital gain arising from the transfer of such capital asset which represents the extent to which the income derived from the capital asset transferred was, immediately before such transfer, applicable to charitable or religious purposes. Explanation .- In this section, net consideration shall have the meaning assigned to it in Explanation 5 below sub-section (1) of section 54E. .