Section 54EB of Income Tax Act "Capital gain on transfer of long-term capital assets not to be charged in certain cases"
54EB. (1) Where the capital gain arises from the transfer
of a long-term capital asset before the 1st day of April,
2000 (the capital asset so transferred being hereafter in
this section referred to as the original asset), and the
assessee has, at any time within a period of six months
after the date of such transfer invested the whole or any
part of capital gains, in any of the assets specified by the
Board in this behalf by notification in the Official Gazette
(such assets hereafter in this section referred to as the
long-term specified assets), the capital gain shall be dealt
with in accordance with the following provisions of this
section, that is to say,-
(a) if the cost of the long-term specified asset is not less
than the capital gain arising from the transfer of the
original asset, the whole of such capital gain shall not be
charged under section 45 ;
(b) if the cost of the long-term specified asset is less
than the capital gain arising from the transfer of the
original asset, so much of the capital gain as bears to the
whole of the capital gain the same proportion as the cost of
acquisition of the long-term specified asset bears to the
whole of the capital gain, shall not be charged under
section 45.
Explanation.-"Cost", in relation to any long-term
specified asset, means the amount invested in such specified
asset out of capital gains received or accruing as a result
of the transfer of the original asset.
(2) Where the long-term specified asset is transferred or
converted (otherwise than by transfer) into money at any
time within a period of seven years from the date of its
acquisition, the amount of capital gains arising from the
transfer of the original asset not charged under section 45
on the basis of the cost of such long-term specified asset
as provided in clause (a), or as the case may be, clause (b)
of sub-section (1) shall be deemed to be the income
chargeable under the head "Capital gains" relating to
long-term capital assets of the previous year in which the
long-term specified asset is transferred or converted
(otherwise than by transfer) into money.
Explanation.-In a case where the original asset is
transferred and the assessee invests the whole or any part
of the capital gain received or accrued as a result of
transfer of the original asset in any long-term specified
asset and such assessee takes any loan or advance on the
security of such specified asset, he shall be deemed to have
converted (otherwise than by transfer) such specified asset
into money on the date on which such loan or advance is
taken.
(3) Where the cost of the long-term specified asset has been
taken into account for the purposes of clause (a) or clause
(b) of sub-section (1), a deduction from the amount of
income-tax with reference to such cost shall not be allowed
under section 88.