This concerns the sale of residential land and utilization of the proceeds to acquire agricultural land: Can the value of the agricultural land being purchased be deducted from the proceeds of the sale of the residential land? What documents need to be prepared and submitted (and where)?
The profit earned in selling the fixed asset is called Capital Gain. Capital Gain is taxable during the year it is earned.
There is an exception to the above rule. If you invest the amount of sale proceeds for purchase of another fixed asset like land and/or house, capital gains are exempted upto that amount. After sale, you are given a time of 6 months. You have to deposit entire sale proceeds into a special bank account, called Capital Gains SB account, which every Bank offers. Take a DD for the entire sale proceeds and deposit the amount into this Capital Gains SB account opened by you.
I sincerely advise you to contact a Chartered Accountant (not a Lawyer) to handle this entire matter so that all documentation can be done properly. Compared to the cost of mistakes you are likely to commit, it is quite cheaper to pay a Chartered Accountant and get things done properly.