Exemption u/s 54b

Capital gains arising on the transfer of land used by an individual or his parents for agricultural purposes for a period of two years immediately preceding the date of transfer is exempt form the tax if the individual assessee has purchased another agricultural land within a period of two years from the date of such transfer (subject to the requirements).

i think he can claim this deduction though he has given for contract

Agriculture land which  has been   used   by   assessee himself or by his parents for agriculture purposes during last 2 yrs of transfer

so he can take exemption u/s 54 b

However there is a loophole in this section

by buying rural agriculture land, we have to not satisfyng the condition of 3 yrs since 

But as per section 2(14) , Rural Agriculture land is not a capital asset

The above provisions are well planned to encourage investment in agricultural land in rural areas so as to enable and smoothen the process of economic growth but the fact that capital gains arising from the sale of agricultural land is exempt if the new land so purchased is situated in the areas specified in the section 2(14)(iii). This gives the assessee the leverage to purchase agricultural land from the taxable capital gains but not hold it for the intended period of time. Rather, the assessee can very well sell the property in a few days without bothering about the tax liability as the new capital gain is exempt under the act.