Capital gain on the compulsory acquisition of lands and buildings is not to be charged in certain cases

When the capital gain results from the transfer of a capital asset—such as land or a building or any right in land or a building—that is a part of an industrial undertaking owned by the assessee and that, in the two years prior to the date on which the transport took place, was being utilised by the taxpayer for the purposes of the business of the mentioned undertaking by way of compulsory acquisition under any law, and the taxpayer has within three years of that date acquired any other land or building or any interest in any other land or building, or built any other building for the purpose of relocating the said enterprise, establishing it again, or establishing another industrial undertaking, then, the capital gain will therefore be handled in line with the rules of this section listed below, rather from being charged to income tax as the income of the prior year in which the transfer occurred:-

  (a) If the capital gain is greater than the amount of the land, building, or right so acquired or the building so designed (such land, building, or right being hereinafter in this section referred to as the new asset), the difference between the capital appreciation and cost of the new asset shall be defined under Section 45 as the income of the previous year. The cost shall be zero for the purpose of calculating any capital gain arising from the transfer of the new asset within three years of acquisition or construction, as applicable; or

  (b) If the accounting profit is equal to and less than the cost of the new asset, it will not be subject to section 45's tax. The cost of the new asset will also be adjusted to account for any capital gains that result from transfers made within three years of the asset's purchase or construction, as applicable, in order to compute any such gains.

You can browse this URL in section 80g.

The amount of the capital gain that the assessee does not use to purchase or construct the new entity before the date of furnishing the income returns under section 139 must be deposited by him prior to furnishing such return in an account in any bank or institution that may be specified in and used in accordance with, any scheme that the Central Government may frame in this regard by notification in the Official Gazette. The money, if any, previously used by the assessee for the acquisition or construction of the new asset along with the amount so contributed shall be taken to constitute the cost of the new asset for the purposes of the aforementioned sub-section.

Get benefits of tax exemptions.

If the money deposited under this subsection is not used entirely or in part for the development or acquisition of the new asset within the time frame stated in the preceding subsection, then,

 (i) if the three-year window from the transfer date of the original asset ends without being used, the amount not so used must be charged under Section 45 as income of the preceding year; and

 (ii) according to the aforementioned plan, the assessee shall be permitted to withdraw such sum.

Gain beneficial knowledge about 80g.