What are the circumstances in which exemption under section 54D can be withdrawn?
​​ The exemption claimed by assessee under section 54D can be withdrawn in the following circumstances:
a) Transfer of new land or building within 3 Years: If a taxpayer purchases new land or building to claim exemption under section 54D and subsequently transfers such land or building within a period of 3 years from the date of its acquisition/construction, then the benefit granted under s​ection 54D will be withdrawn.
If the new land or building is sold within a period of 3 years from the date of its purchase/construction, then at the time of computation of capital gain arising on transfer of the new land or building, the amount of capital gain claimed as exemption under this section will be deducted from the cost of acquisition of the such land or building.
b) Amount deposited in capital gains scheme account is not utilized in prescribed time limit: If the amount deposited in the Capital Gains Account Scheme in respect of which the taxpayer has claimed exemption is not utilised within the specified period for purchase or construction of another land or building, then the unutilised amount will be taxed as income for the previous year in which the specified period of 3 years gets completed.