297 1[54GB. Capital gain on transfer of residential property not to be charged in certain
cases .
(i)the capital gain arises from the transfer of a long -term capital asset, being a residential
propert y (a house or a plot of land), owned by the eligible assessee (herein referred to as the
assessee); and (ii)the assessee, before the due date of furnishing of return of income under sub -section ( 1)
of section 139, utilises the net consideration for subscr iption in the equity shares of an eligible
company (herein referred to as the company); and (iii)the company has, within one year from the date of subscription in equity shares by the
assessee, utilised this amount for purchase of new asset,
then, instead of the capital gain being charged to income -tax as the income of the previous year in which
the transfer takes place, it shall be dealt with in accordance with the following provisions of this section,
that is to say, - (a)if the amount of the net conside ration is greater than the cost of the new asset, then, so much
of the capital gain as it bears to the whole of the capital gain the same proportion as the cost of the
new asset bears to the net consideration, shall not be charged under section 45 as the i ncome of the
previous year; or (b)if the amount of the net consideration is equal to or less than the cost of the new asset, the
capital gain shall not be charged under section 45 as the income of the previous year. (2)The amount of the net consideration, which has been received by the company for issue of shares
to the assessee, to the extent it is not utilised by the company for the purchase of the new asset before the
due date of furnishing of the return of income by the assessee under section 139, shall be deposited by the
company, before the said due date in an account in any such bank or institution as may be specified and
shall be utilised in accordance with any scheme which the Central Government may, by notification in the
Official Ga zette, frame in this behalf and the return furnished by the assessee shall be accompanied by
proof of such deposit having been made. (3)For the purposes of sub -section ( 1), the amount, if any, already utilised by the company for the
purchase of the new as set together with the amount deposited under sub -section ( 2) shall be deemed to be
the cost of the new asset:
Provided that if the amount so deposited is not utilised, wholly or partly, for the purchase of the new
asset within the period specified in sub-section ( 1), then, - (a)the amount of capital gain arising from the transfer of the residential property not charged
under section 45 on the basis of the cost of the new asset as provided in sub -section ( 1),
exceeds - (b)the am ount that would not have been so charged had the amount actually utilised for the
purchase of the new asset within the period specified in sub -section ( 1)been the cost of the new
asset,
shall be charged under section 45 as income of the assessee for the pr evious year in which the period
of one year from the date of the subscription in equity shares by the assessee expires; and (ii)the company shall be entitled to withdraw such amount in accordance with the scheme.