Section 54ED of Income Tax Act "Capital gain on transfer of certain listed securities or unit not to be charged in certain cases"
54ED. (1) Where the capital gain arises from the transfer
before the 1st day of April, 2006, of a long-term capital
asset, being listed securities or unit (the capital asset so
transferred being hereafter in this section referred to as
the original asset), and the assessee has, within a period
of six months after the date of such transfer, invested the
whole or any part of the capital gain in acquiring equity
shares forming part of an eligible issue of capital (such
equity shares being hereafter in this section referred to as
the specified equity shares), the said 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 specified equity shares 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 specified equity shares 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 the
specified equity shares acquired bears to the whole of the
capital gain shall not be charged under section 45.
Explanation.-For the purposes of this sub-section,-
(i) "eligible issue of capital" means an issue of equity
shares which satisfies the following conditions, namely:-
(a) the issue is made by a public company formed and
registered in India;
(b) the shares forming part of the issue are offered for
subscription to the public;
(ii) "listed securities" shall have the same meaning as in
clause (a) of the Explanation to sub-section (1) of section
112;
(iii) "unit" shall have the meaning assigned to it in clause
(b) of the Explanation to section 115AB.
(2) Where the specified equity shares are sold or otherwise
transferred within a period of one year from the date of
their acquisition, the amount of capital gain arising from
the transfer of the original asset not charged under section
45 on the basis of the cost of such specified equity shares
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 such
equity shares are sold or otherwise transferred.
(3) Where the cost of the specified equity shares has been
taken into account for the purposes of clause (a) or clause
(b) of sub-section (1),-
(a) a deduction from the amount of income-tax with reference
to such cost shall not be allowed under section 88 for any
assessment year ending before the 1st day of April, 2006;
(b) a deduction from the income with reference to such cost
shall not be allowed under section 80C for any assessment
year beginning on or after the 1st day of April, 2006.