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55. Relief for rollover of investment asset
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55. Relief for rollover of investment asset.—(1) An individual or a Hindu undivided family shall be allowed a deduction, in respect of rollover of any original investment asset referred to in sub-section (3) of section 51, from the capital gain arising from the transfer of the asset in accordance with the provisions of this section.
(2) The deduction referred to in sub-section (1) shall be computed in accordance with the formula—
Where,
A = the amount of capital gains arising from the transfer of the original investment asset ;
B = the amount invested for purchase or construction of the new asset referred to in sub-section (6) within a period of one year before the date of transfer of original investment asset ;
C = the amount invested for purchase or construction of the new asset referred to in sub-section (6) by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later ;
D = the amount deposited in an account in any bank by the end of the financial year in which the transfer of original investment asset is effected or six months from the date of transfer, whichever is later in accordance with the Capital Gains Deposit Scheme framed by the Central Government in this behalf ;
E = the net consideration received as a result of the transfer of the original investment asset.
(3) The deduction computed under sub-section (2) shall not exceed the amount of capital gains arising from the transfer of the investment assets.
(4) Any amount withdrawn from an account under the Capital Gains Deposit Scheme shall be utilised within a period of one month from the end of the month in which the amount is withdrawn, for the purposes of purchase or construction of the new asset.
(5) The amount deposited in the account under the Capital Gains Deposit Scheme shall be utilised for the purposes of purchase or construction of the new asset within a period of three years from the end of the financial year in which the transfer of the original asset is effected.
(6) The deduction under this section in respect of capital gain arising from the transfer of an investment asset, specified in column (2) of the Table given below, shall be allowed with reference to the corresponding new investment asset referred to in column (3) of the said Table, subject to the fulfilment of conditions specified in column (4) thereof :
Table
Rollover Relief
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Serial number |
Description of the original investment asset |
Description of the new investment asset |
Conditions |
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(1) |
(2) |
(3) |
(4) |
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1. |
Agricultural land |
One or more pieces of agricultural land |
(1) The original investment asset was— |
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(i) an agricultural land during two years immediately preceding the financial year in which the asset is transferred ; and |
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(ii) acquired at least one year before the beginning of the financial year in which the transfer of the asset took place. |
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2. |
Any investment asset |
Residential house |
(2) The new asset shall not be transferred within one year from the end of the financial year in which the new asset is acquired— |
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(i) the assessee does not own more than one residential house, other than the new investment asset, on the date of transfer of the original investment asset ; and |
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(ii) the original investment asset was acquired at least one year before the beginning of the financial year in which the transfer of the asset took place ; |
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(iii) the new asset shall not be transferred within one year from the end of the financial year in which the new asset is acquired or constructed. |
(7) In this section, "net consideration" means the full value of consideration received or accruing as a result of the transfer of an investment asset as reduced by any expenditure incurred wholly or exclusively in connection with such transfer.
Clause 55 relates to relief for rollover of investment asset. It provides that an individual or a Hindu undivided family shall be allowed a deduction, in respect of rollover of any original investment asset referred to in sub-clause (3) of clause 51, from the capital gain arising from the transfer of the asset. Such deduction shall be computed in accordance with the formula—
Where A = the amount of capital gains arising from the transfer of the original investment asset ;
B = the amount invested for purchase or construction of the new asset referred to in sub-clause (6) within a period of one year before the date of transfer of original investment asset ;
C = the amount invested for purchase or construction of the new asset referred to in sub-clause (6) by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later ;
D = the amount deposited in an account in any bank by the end of the financial year in which the transfer of the original investment asset is effected or six months from the date of transfer, whichever is later, in accordance with the Capital Gains Deposit Scheme framed by the Central Government in this behalf ;
E = the net consideration received as a result of the transfer of the original investment asset.
The said clause further provides that such deduction shall not exceed the amount of capital gains arising from the transfer of the investment asset. Further, any amount withdrawn from an account under the Capital Gains Deposit Scheme shall be utilised within one month from the end of the month in which the amount is withdrawn, for the purposes of purchase or construction of the new asset. Also, the amount deposited in the account under the Capital Gains Deposit Scheme shall be utilised for the purposes of purchase or construction of the new asset within three years from the end of the financial year in which the transfer of the original asset is effected.
The said clause further provides that such deduction shall be allowed if—
(a) the transferred investment asset (original investment asset) was an agricultural land during two years immediately preceding the year of transfer and the person, being an individual or Hindu undivided family, acquires one or more pieces of agricultural land at least one year before the beginning of the financial year in which the transfer of the asset took place subject to the condition that the new asset shall not be transferred within one year from the end of the financial year in which the new asset is acquired ;
(b) the transferred investment asset (original investment asset) was any asset acquired at least one year before the beginning of the financial year of transfer and the new investment asset is a residential house and the person does not own more than one residential house, other than the new investment asset on the date of transfer of the original asset subject to the condition that a new asset shall not be transferred within one year from the end of the financial year in which the new asset is acquired or constructed;
The said clause also defines the term "net consideration".
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