capital gains tax

I am intending to sell a flat (self-acquired from my own money in 2004) which might bring me a profit of about Rs.40 lakhs. To offset the capital gains tax I intend to buy a flat but unfortunately that flat is priced at around Rs.25 lakhs only. My query is:

1) can i buy two such flats for Rs.50 lakhs and still claim tax exemption (or is the exemption allowed for only one flat?)

2) secondly, in case paying capital gains tax is unavoidable, which is better to invest the balance amount in one of those capital gains bond or will it be wise to pay off the tax and invest the rest of the money somewhere else productively?

Manythanks
--Vijay