Section 84
Section 84: capital gains on compulsory acquisition of lands and buildings not to be charged in certain cases
Section 84 exempts capital gains where land or a building belonging to an industrial undertaking is compulsorily acquired, and the assessee reinvests within three years to shift, re-establish, or set up another industrial undertaking. It is the successor to Section 54D of the old Act, and uses the same deposit-scheme mechanism as the other reinvestment exemptions in this Chapter.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
Who qualifies and the basic mechanism
Section 84(1) applies where an assessee has capital gains from a compulsory acquisition under any law, of land or building (or any right in land or building) forming part of an industrial undertaking, which was used by the assessee for that undertaking's business in the two years immediately preceding the transfer (the "original asset"). If, within three years after the transfer, the assessee purchases other land/building (or a right in it) or constructs another building, for shifting or re-establishing the undertaking or setting up another industrial undertaking (the "new asset"), then:
- If the capital gains exceed the cost of the new asset, the excess is taxed under Section 67, and the cost of the new asset is treated as nil for computing gains if it is sold within three years of purchase/construction.
- If the capital gains are equal to or less than the cost of the new asset, no capital gains are taxed, and the cost of the new asset is reduced by the amount of the capital gains for computing gains if it is sold within three years of purchase/construction.
The deposit scheme for unutilised gains
If the capital gains are not utilised to purchase/construct the new asset before the assessee files the return of income under Section 263, Section 84(2) requires the unutilised amount to be deposited in a specified bank/institution under the Central Government's notified scheme, before the return-filing due date under Section 263(1), with proof of deposit submitted along with the return.
Section 84(3) treats the amount already utilised for the new asset, plus the deposited amount, as the cost of the new asset.
If the deposited amount is not fully utilised for purchase/construction of the new asset within the three-year period in Section 84(1), Section 84(4) taxes the unutilised balance under Section 67 as income of the year in which those three years from the original transfer expire, and the assessee can withdraw the unutilised amount as per the deposit scheme.
Frequently asked questions
What kind of asset does Section 84 cover?
Land or building (or a right in land or building) forming part of an industrial undertaking, compulsorily acquired under any law, and used by the assessee for that undertaking's business in the two years before the acquisition, per Section 84(1)(a).
How long do I have to reinvest the compensation to claim this exemption?
Within three years after the date of the transfer, to purchase land/building or construct a building for shifting, re-establishing, or setting up another industrial undertaking, per Section 84(1)(b).
What if I can't reinvest the compensation before filing my return?
You must deposit the unutilised amount in a specified bank/institution under the notified deposit scheme before the return filing due date, and submit proof of deposit with the return, per Section 84(2).
Related sections
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Get expert help claiming your industrial land compulsory acquisition exemptionLast updated 9 September 2026