Exemption Of Capital Gains In Agricultural Land — Section 54B
Where the capital gains, both short-term and long-term, arise from the transfer of a capital asset, being land which, in the 2 years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes, and the assessee has, within a period of 2 years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income tax as income of previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of Section 54B; that is to say:
(1) if the amount of the capital gain is greater
than the cost of the land as purchased (hereinafter referred to as the new
asset) the difference between the amount of the capital gain and the cost of
the new asset shall be charged under Section 45 as the income of the previous
year; and for the purpose of computing in respect of new asset any capital gain
arising from its transfer within a period of 3 years of its purchase, the cost
shall be nil ; or