1) The long term capital gains (LTCG) arises upon sale of your ancestral property in Sept 2017, i.e., FY 2017-18.
2) As you wish to invest the proceeds into a new project, which I presume to be a new residential house, you should deposit the money in Capital Gains A/c maintained by your bank. It can be like any other SB a/c or FD a/c. The withdrawals are permitted only for the acquisition of the new house.
If your new project is not a residential house, then your LTCG will not get any exemption, unless you invest the money in specified bonds u/s 54EC or funds/units u/s 54EE with a lock in period of 3 years.
3) If you have any losses under the Long Term Capital Gains for the current year or brought forward from previous years, you can set off the gains on this sale against such losses. You can also choose to set off such LTCG against loss, if any, under the head Short term capital gains or business income.