Likewise, when a sole proprietary concern is succeeded by a company in business carried on by it as a result of which the sole proprietary concern sells or otherwise transfers any capital asset or intangible assets to the company, the entire amount of capital gains would be fully exempt from tax under Section 47(xiv) from the A.Y. 1999-2000. However, the following conditions are to be fulfilled:
All the assets and liabilities of the sole proprietary concern relating to the business immediately before the succession become the assets and liabilities of the company;
The shareholding of the sole proprietor in the company is not less than 50% of the total voting power in the company and his shareholding continues to so remain as such for a period of five years from the date of the succession; and,
The sole proprietor does not receive any consideration or benefit, directly or indirectly, in any form or manner other than by way of allotment of shares in the company.