(b) Mr. Raj a resident individual, aged 69 years sold an urban agricultural land for 75,00,000 to Mr. Vipul on December 15, 2023 when the stamp duty…

Computation of Capital Gains of Mr. Raj for A.Y.2024-25 Particulars ₹ Capital gain on sale of urban agricultural land Actual sale consideration 75,00,000 Stamp duty value as on date of agreement i.e., on 15.7.2023 [Since part consideration is received through IMPS on the date of agreement] 85,00,000 Full Value of Consideration [Stamp duty value on the date of agreement since it exceeds 110% of the actual sale consideration] 85,00,000 Less: Expenditure in connection with transfer [1% of sale consideration i.e.,75 lakhs] 75,000 Net Sales Consideration 84,25,000 Less: Indexed cost of acquisition [₹ 10,85,000 x 348/105] 35,96,000 48,29,000 Less: Exemption u/s 54B – In respect of rural agricultural land purchased on 1.1.2024. Mr. Raj is eligible to claim exemption u/s 54B since he has used the urban agricultural land for agricultural purposes for more than 2 years preceding the date of its transfer. [See Note for alternative answer] 40,00,000 Long term capital gain 8,29,000 Capital gain on sale of rural agricultural land As per section 54B, if the new agricultural land is transferred within 3 years from the date of its purchase, while computing the capital gains on transfer of such new agricultural land, the cost of acquisition of such land would be reduced by the amount of capital gain claimed as exempted. However, since rural agricultural is not a capital asset, no capital gain would arise on sale of such land even though it is transferred within 3 years from the date of its purchase. Note [Alternative answer] – Mr. Raj transferred urban agricultural land on 15.12.2023 and purchased rural agricultural land on 1.1.2024 which is sold on 12.3.2024. Since the rural agricultural land is sold within the same previous year in which original asset was transferred i.e., P.Y. 2023-24, a view can be taken that the exemption under section 54B would not be available as at the time of filing return of income such acquired land does not exist. In such case, long term capital gain would be - 48,29,000.