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TMI Blog2015 (2) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Area, Anekal, Bangalore for a sale consideration of Rs.90 lacs. There is no dispute that on such transfer there was a short term capital gain of Rs.85,11,648. The Assessee claimed that the capital gain is not chargeable to tax and is exempt u/s.54G of the Act. Section 54G, was inserted by the Finance Act, 1987 w.e.f. 1st April, 1988.The relevant provisions of Sec.54G of the Act reads as follows: "54G. Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area.-(1) Subject to the provisions of sub-section (2), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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, "urban area" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial unit in a non-urban area at Anathapur District of AP for which it had advanced substantial amounts to M/S.APSFC and M/S.APIDC for the purchase of land in non-urban area in Anathapur District, State of Andhra Pradesh. 5. The first question which the AO took up for consideration was as to whether the property transferred by the Assessee was 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. The AO noticed that as per Explanation to Sec.54G(1) "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, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/S.Fibre Board (supra) had since been reversed by the Hon'ble Karnataka High Court in ITRC No.26/1997 dated 26.5.2005 whereby the Hon'ble Karnataka High Court after noticing the notification of Urban Areas in and around Bangalore by notification dated 27.4.2006 referred to in the earlier paragraph, held that such notification cannot have any retrospective effect. 9. On further appeal by the Assessee the ITAT in ITA No.948/Bang/2006 order dated 26.10.2006 set aside the order of the CIT(A) and remanded the issue to the AO on the representation of the Assessee that the Assessee has moved the CBDT to make the notification dated 27.4.2006 retrospective from 1.4.1988. 10. As per the directions of the ITAT the AO passed an order giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o retrospective effect. In view of the legal position mentioned above, the assessee's contention is not tenable. 13. The assessee raised another issue that under section 280ZA of the Act, which was a section providing for relief to Assessees who relocate their industries to Backward area, Bangalore was notified as urban area for the purpose of giving relief for shifting the industry from Bangalore to other backward area. Section 280ZA of the Act was introduced by the Finance Act 1965 with effect from 01/04/1965 and omitted by the Finance Act 1987 with effect from 01/04/1988. Section-280Z provided for relief by way of reduction of a fraction of tax on capital gains arising from the sale of the assets at the old place from where an industria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore and area upto a distance of 8 Kms. from municipal limits of Bangalore in all directions have been notified as urban areas. According to him, definition of urban area cannot be different for the purpose of section 54G. 17. We are unable to accept the aforesaid argument of the ld. counsel for the assessee. The benefit conferred u/s. 54G of the Act is a specific benefit. Explanation below section 54G(1) of the Act contemplates notification by the Central Government for the purpose of allowing deduction u/s. 54G of the Act. The Notification issued under a different provision of the Act which is meant for different purpose cannot be applied while dealing with the provision of section 54G of the Act. We therefore reject the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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