<s>[INST] What are the circumstances in which exemption under section 54GB can be withdrawn? [/INST] The exemption claimed by assessee under s​ection 54F can be withdrawn in the following circumstances:
a) Shares of the eligible company sold by the assessee: If the individual or HUF sells or otherwise disposes of the equity shares in the eligible company within a period of 5 years from the date of purchase, the earlier granted exemption or proportionate exemption on the capital gain will be considered as long-term capital gain and will be subject to tax in the year of sale or transfer.
b) New Asset sold by the eligible company: If the new asset, such as plant or machinery, is sold or transferred by the eligible start-up company within 5 years (3 years in case of computer or computer software) from the date of acquisition, the previous exemption given on the capital gains invested in the company will be considered as a long-term capital gain and subject to taxation in the year in which the asset is sold or transferred.
c) Non-utilisation of the amount deposited in the capital gain account scheme: When the eligible company fails to use the funds deposited in the capital gains scheme account to acquire new assets within one year of subscribing to equity shares, the earlier granted exemption (or proportionate exemption) will be considered as long-term capital gain of the assessee for the financial year in which the one-year time limit expires. </s>