An urban agricultural land of an individual was compulsorily acquired by the State Government and…

Because the urban agricultural land had not been used for agricultural purposes during the two years immediately preceding the compulsory acquisition, the exemption under Section 10(37) of the Income-tax Act, 1961 does not apply. Using the Cost Inflation Index for 2003-04 (463, as the land was purchased on 10.2.2004) and 2012-13 (852), the indexed cost of acquisition is $4{,}63{,}000 \times \frac{852}{463} = \text{Rs. } 8{,}52{,}000$, giving a taxable long-term capital gain of $20{,}00{,}000 - 8{,}52{,}000 = \text{Rs. } 11{,}48{,}000$.