Exemption under section 54B - Investment in agri land

Good Morning CA K. Srividhya,

Thanks for your detailed query on Section 54B and the Capital Gains Account Scheme (CGAS) timeline for investment in agricultural land.

✅ Background:

• Agri land sold in Feb 2019 → Capital gain arose.

• Capital gain amount deposited in CGAS to claim exemption under Section 54B.

• Original time to invest in new agri land: within 2 years from date of sale, i.e., by Feb 2021.

• Actual acquisition happened only in June 2021, after the deadline.

• Circular No. 12/2021 provides some relaxation for Section 54EC, but not explicitly for Section 54B.

✅ Your Question:

Is there any other notification or relief for extending the investment period beyond 2 years for Section 54B?

✅ Analysis and Current Position:

1. Section 54B allows exemption if the capital gain is invested in agricultural land within 2 yearsfrom the date of sale (or within 1 year before sale).

2. CGAS deposit is considered a valid mode of claiming exemption only if the investment is made before the deadline (2 years).

3. The Circular 12/2021 issued by CBDT relates primarily to Section 54EC (investment in specified bonds) and extends the deadline by one year due to COVID-19. It does NOT cover Section 54B explicitly.

4. There is no separate notification or circular extending the time limit for investment under Section 54B so far.

✅ Likely Consequences:

• Since the investment in agri land was made after the 2-year deadline (June 2021 vs Feb 2021 deadline), exemption under Section 54B is likely to be denied.

• The capital gain will be taxable in the year of sale (FY 2018-19).

• The amount deposited in CGAS will be treated as income and taxable, unless refunded.

• If the investment was made after the due date, no exemption is available, and the capital gain cannot be carried forward as exempt.

✅ Suggested Steps:

1. File revised return if exemption was claimed earlier but investment was delayed.

2. Consider claiming exemption in future years only if new notifications come out (unlikely).

3. Maintain detailed documentation to support the delay due to genuine reasons (although relief unlikely).

4. If refund from CGAS not claimed, file application for refund of unutilized amount.

✅ Summary Table: