Section 54B of Income Tax Act "Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases"
54B. (1) Subject to the provisions of sub-section (2),
where the capital gain arises from the transfer of a capital
asset being land which, in the two years immediately
preceding the date on which the transfer took place, was
being used by the assessee being an individual or his
parent, or a Hindu undivided family for agricultural
purposes (hereinafter referred to as the original asset),
and the assessee has, within a period of two 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 the previous year
in which the transfer took place, it shall be dealt with in
accordance with the following provisions of this section,
that is to say,-
(i) if the amount of the capital gain is greater than the
cost of the land so 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 the new asset any
capital gain arising from its transfer within a period of
three years of its purchase, the cost shall be nil; or
(ii) if the amount of the capital gain is equal to or
less than the cost of the new asset, the capital gain shall
not be charged under section 45; and for the purpose of
computing in respect of the new asset any capital gain
arising from its transfer within a period of three years of
its purchase, the cost shall be reduced, by the amount of
the capital gain.
(2) The amount of the capital gain which is not utilised by
the assessee for the purchase of the new asset before the
date of furnishing the return of income under section 139,
shall be deposited by him before furnishing such return
[such deposit being made in any case not later than the due
date applicable in the case of the assessee for furnishing
the return of income under sub-section (1) of section 139]
in an account in any such bank or institution as may be
specified in, and utilised in accordance with, any scheme
which the Central Government may, by notification in the
Official Gazette, frame in this behalf and such return shall
be accompanied by proof of such deposit; and, for the
purposes of sub-section (1), the amount, if any, already
utilised by the assessee for the purchase of the new asset
together with the amount so deposited shall be deemed to be
the cost of the new asset :
Provided that if the amount deposited under this sub-section
is not utilised wholly or partly for the purchase of the new
asset within the period specified in sub-section (1), then,-
(i) the amount not so utilised shall be charged under
section 45 as the income of the previous year in which the
period of two years from the date of the transfer of the
original asset expires; and
(ii) the assessee shall be entitled to withdraw such amount
in accordance with the scheme aforesaid.
Explanation.-[Omitted by the Finance Act, 1992, w.e.f.
1-4-1993.]