Section 54B exemption cannot be denied for missing the deposit scheme when new agricultural land is bought within time.

Section 54B exemption for reinvestment in agricultural land was treated as a beneficial provision, and the substantive condition was satisfied where the assessee purchased new agricultural land within the prescribed period. Non-deposit of the capital gain in the Capital Gain Deposit Scheme by the due date under section 139(1) was held to be only a procedural lapse and not a sufficient ground to deny relief when the qualifying investment was otherwise made on time. The revenue challenge therefore failed, and the exemption was sustained.

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Issues: Whether exemption under section 54B of the Income-tax Act, 1961 could be denied merely because the assessee did not deposit the capital gain in the Capital Gain Deposit Scheme by the due date under section 139(1), despite having invested in new agricultural land within the prescribed period.

Analysis: The investment in the new agricultural land within two years was undisputed. The only objection was non-compliance with the deposit mechanism under the Capital Gain Deposit Scheme. The provision granting exemption was treated as a beneficial one, and the substantive requirement of re-investment in agricultural land was held to have been satisfied. A procedural lapse in not routing the amount through the deposit scheme was held insufficient to defeat the exemption where the statutory time limit for investment was met.

Conclusion: The exemption under section 54B could not be denied on the ground of failure to deposit the amount in the Capital Gain Deposit Scheme, since the investment in the new agricultural land was made within the stipulated period. The finding was in favour of the assessee.

Final Conclusion: The revenue's challenge to the grant of exemption failed, and the relief allowed by the first appellate authority stood affirmed.

Ratio Decidendi: A beneficial exemption for reinvestment in agricultural land cannot be denied on a mere procedural lapse where the assessee has made the qualifying investment within the statutory time limit.

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