802. Receipt of compensation and insurance money not treated as a disposal.

If the recipient so claims, receipt of a capital sum1 derived from an asset which is not lost or destroyed is not treated as a disposal of the asset if:

  1.  

    (1)     the capital sum is wholly applied in restoring the asset;

  2.  

    (2)     the capital sum is so applied except for a part which is not reasonably required for the purpose and which is small as compared with the whole capital sum; or

  3.  

    (3)     the amount of the capital sum is small, as compared with the value of the asset2.

If under this provision the receipt is not treated as a