The B is a 2.9 L (2977 cc) Inline 4 8 Valve OHV diesel engine. Bore is 95 mm and stroke is 105 mm, with a compression ratio of 21:1. Output is 80 hp (59.6 kW) at 3600 RPM with 141 ft·lbf (190.9 Nm) of torque at 2200 RPM.
The 1KZ-T is an early version of 1KZ-TE, 2982 cc, 4 cylinders, SOHC, 3 valve per cylinder turbo diesel engine. Bore is 96 mm and stroke is 103 mm, with a compression ratio of 21.2:1. Maximum output is 125 hp (93 kW) @ 3600 rpm and maximum torque is 29.3 kgf·m (287 N·m) @ 2000 rpm.
Besides the later has got a better weight to power ratio and is priced at 65k to 70k, which is infact just a bit more than what you will have to pay for a good B1 engine or in some cases more!
My suggestion to you is "Get a 1KZ-T" engine and transmission.
DO you have the snaps of the vehicle in question? if yes please do post them because 5.5 lac for the whole deal sounds a bit on the higher side.
Secondly take a look at the snaps and specs of the CJ7 on sale here on Pak-wheels (mine included:) )as compare with your would be jeep and then decide if it is a good deal or not.