Capital gains on transfer of foreign exchange assets not to be charged in certain cases.(1) Where, in the case of an

1. (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; 3. The words “or deposited” omitted by Act 26 of 1988, s. 32 (w.e.f. 1-4-1989). 4. The words, brackets, figure and letter “or in an account referred to in clause (4A)” omitted by s. 32, ibid. (w.e.f. 1-41989). 5. The words “or such deposit in the account aforesaid” omitted by s. 32, ibid. (w.e.f. 1-4-1989).
2. (b) if the cost of the new asset is less than the net consideration in respect 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 new asset bears to the net consideration shall not be charged under section 45. Explanation.—For the purposes of this sub-section,—
   • (i) “cost”, in relation to any new asset, being a deposit 1*** referred to in sub-clause (iii), or specified under sub-clause (v), of clause (f) of section 115C, means the amount of such deposit;
   • (ii) “net consideration”, in relation to the transfer of the original asset, means the full value of the consideration received or accruing as a result of the transfer of such asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

¹ Subs. by Act 18 of 1992, s. 57, for “under sub-section (2) of section 48 or under Chapter VIA” (w.e.f. 1-4-1993).

² Subs. by Act 26 of 1997, s. 36, for section 115E (w.e.f. 1-4-1998).

1. (2) Where the new asset is transferred or converted (otherwise than by transfer) into money, within a period of three years from the date of its 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 new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head “Capital gains” relating to capital assets other than short-term capital assets of the previous year in which the new asset is transferred or converted (otherwise than by transfer) into money.