54ED. Capital gain
on transfer of certain listed securities or unit not to be
charged in certain cases.- (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.
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