Capital gains exemption withdrawn when reinvestment lapses or replacement property sold early, resulting in taxable capital gains. Exemption under section 54 is withdrawn where deposits in the capital gains account scheme are not used to acquire or construct the residential house within the prescribed period, causing the unutilised deposit to be treated as deemed long term capital gain in the year the time limit expires; and where the replacement residential property is transferred within the relevant holding period, the amount of capital gain earlier claimed as exempt is deducted from the cost of acquisition of that replacement property for computing capital gain on its transfer.