Capital gains exemption where residential sale proceeds are subscribed to an eligible company and used for new plant and machinery. Capital gains from sale of a long term residential property are not charged under section 45 if the assessee subscribes the net consideration in equity of an eligible company and the company utilises those funds to purchase qualifying new plant and machinery within one year; the exempted portion is proportionate to the cost of the new asset relative to net consideration. Unutilised proceeds must be deposited by the company in a specified account by the assessee's return due date, with deposits treated as part of the new asset cost; failure to utilise deposits within the period triggers taxable re characterisation. A five year clawback applies on subsequent transfers of the shares or new asset.