(1)[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family] [ Substituted by Act 18 of 2005, Section 18, for sub-Section (3) (w.e.f. 1.4.2006).], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] [ Inserted by Act 11 of 1987, Section 23 (w.e.f. 1.4.1988).] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt within accordance with the following provisions of this section, that is to say,-(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;(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 the new asset bears to the net consideration, shall not be charged under section 45:[Provided that nothing contained in this sub-section shall apply where-(a)the assessee,-(i)owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or(ii)purchases any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; or(iii)constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and(b)the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property.]Explanation. - For the purposes of this section,-[* * *] [ Clause (i) omitted by Act 11 of 1987, Section 23 (w.e.f. 1.4.1988).][* * *] [ Omitted by Act 11 of 1987, Section 23 (w.e.f. 1.4.1988).]"net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.
