Section 54F of the Income Tax Act

Income-tax Act, 2025: s.86

Section 54F of the Income-tax Act, 1961 corresponds to section 86 (Capital gains on transfer of certain capital assets not to be charged in case of investment in residential house) of the Income-tax Act, 2025.

Read section 86 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 54F is CIT v. Zoom Communication (P) Ltd. (327 ITR 510), cited in 330 of the 2,628 judgments on BharatTax that turn on this section.

Leading authorities on Section 54F

CIT v. Zoom Communication (P) Ltd.
327 ITR 510 · 2010 · High Court
330
citing judgments

Penalty under section 271(1)(c) is not leviable for legally unsustainable claims if the assessee provides a substantiated, bona fide explanation without concealing facts or giving incorrect information. However, penalty is attracted if a claim is baseless, legally incorrect, and the explanation lacks bona fides.

Mysore Minerals Ltd. v. CIT
239 ITR 775 · 1999 · Supreme Court
215
citing judgments

For income tax purposes, the 'owner' of a property is the person who is entitled to receive income in their own right, bears the risks incidental to ownership, and utilizes the asset, even if the sale deed is not formally registered. This beneficial ownership is sufficient for claiming depreciation or capital gains exemption under relevant sections.

Sanjeev Lal v. CIT
365 ITR 389 · 2014 · Supreme Court
122
citing judgments

For claiming capital gains exemption under beneficial provisions like section 54, the 'date of transfer' can be the date of the agreement to sell, particularly when coupled with substantial advance consideration or an enforceable right, adopting a purposive and liberal interpretation to acknowledge the assessee's intent.

CIT v. Manjula J. Shah
355 ITR 474 · 2013 · High Court
113
citing judgments

For capital assets acquired by gift or will, the indexed cost of acquisition under Section 48 is computed with reference to the year the previous owner first held the asset. The period of holding for determining if an asset is long-term also includes the previous owner's holding period, as per Section 2(42A).

CIT v. Escorts Finance Ltd.
328 ITR 44 · 2010 · High Court
108
citing judgments

An assessee is liable to penalty under Section 271(1)(c) read with Explanation 1 if they make a claim that is incorrect in law, wholly without basis, and the explanation furnished for such a claim is not bona fide.

CIT v. K.G. Rukminiamma
331 ITR 211 · 2011 · High Court
104
citing judgments

For capital gains exemption under Sections 54 and 54F of the Income Tax Act (prior to the 2015 amendment), the expression "a residential house" includes multiple residential units and should not be construed in the singular, by applying Section 13 of the General Clauses Act.

CIT v. D. Ananda Basappa
309 ITR 329 · 2009 · High Court
97
citing judgments

For exemption under Section 54, the expression 'a residential house' allows for investment in multiple residential units that form one functional unit, as 'a' does not imply a singular number. The amendment to Section 54, effective from April 1, 2015, is prospective.

CIT v. Ramkrishna Deo
35 ITR 312 · 1959 · Supreme Court
84
citing judgments

The burden of proving that a particular income is exempt from taxation, or is not taxable, lies on the assessee. To claim an exemption or a deduction, the assessee must provide proper materials to establish eligibility.

CIT v. Gita Duggal
357 ITR 153 · 2013 · High Court
77
citing judgments

For capital gains exemption under sections 54 and 54F, the term "a residential house" does not restrict the exemption to a single residential unit and can include multiple contiguous or combined residential units treated as one house.

CIT v. Kamal Wahal
351 ITR 4 · 2013 · High Court
71
citing judgments

An assessee is eligible for capital gains exemption under Sections 54 and 54F even when the new residential house is purchased in the name of their spouse, provided the investment comes from the assessee's own funds. This allows for a purposive construction of these provisions.

Judgments on Section 54F

DCIT, Cen Cir 2(2), Chennai vs. Anbezhil Suryaraj Kumar, Chennai

In the result, the appeal filed by the Revenue is dismissed

ITA 1676/CHNY/2025[2016-17]Status: DisposedITAT Chennai13 Oct 2025AY 2016-17

Bench: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunathaआयकर अपील सं./I.T.A. No.1676/Chny/2025 िनधा"रण वष"/Assessment Year: 2016-17 The Deputy Commissioner Of Vs. Anbezhil Suryaraj Kumar, Flat No. G.2, Aarudhira Flats, 4Th Street, Income Tax, Central Circle 2(2), Anna Nagar, Chennai 600 040. Chennai. [Pan:Aetpa4862K] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri Shiva Srinivas, Cit ""थ" की ओर से/Respondent By : Shri D. Anand, Advocate सुनवाई की तारीख/ Date Of Hearing : 10.09.2025 घोषणा की तारीख /Date Of Pronouncement : 13.10.2025 आदेश /O R D E R Per S.S. Viswanethra Ravi: This Appeal Filed By The Revenue Is Directed Against The Order Dated 04.03.2025 Passed By The Ld. Commissioner Of Income Tax (Appeals) – 19, Chennai For The Assessment Year 2016-17. 2. We Find That This Appeal Is Filed With A Delay Of 9 Days. The Dcit Central Circle 2(2), Chennai Filed An Affidavit For Condonation Of Delay Stating The Reasons. Upon Hearing Both The Parties & On Examination Of The Said Affidavit, We Find The Reasons Stated By The Appellant-

For Appellant: Shri Shiva Srinivas, CITFor Respondent: Shri D. Anand, Advocate
Section 132Section 153ASection 54

Sadhana Annasaheb Sonwane, Mumbai vs. Income Tax Officer, Mumbai

In the result, appeal of the assessee is allowed

ITA 1636/MUM/2025[2013-14]Status: DisposedITAT Mumbai13 Oct 2025AY 2013-14

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year:2013-14 Sadhana Annasabeh Sonwane Vs Ito Ward 29(3)(2), Mumbai 502/B, Sai Regency, Bhoir Nagar, Vashi Railway Station, Vidyalaya Marg, Mulund (E), 3X7X+Gqp, 3Rd & 4Th Floor, Mumbai 400081 6Th Tower, Complex, Vashi, Navi Mumbai 400703 (Pan: Aqsps7089R) Appellant Respondent Present For: Appellant By : Shri Sanjeev Brahme, Ca Respondent By : Shri. Leyaqat Ali Aafaqui, Sr. Dr Date Of Hearing : 29.07.2025 Date Of Pronouncement : 13.10.2025 O R D E R Per Girish Agrawal: This Appeal Filed By The Assessee Is Against The Order Of Cit(A), National Faceless Appeal Centre (Nfac), Delhi Vide Order No. Itba/Nfca/S/250/2024-25/1072025693(1), Dated 09.01.2025 Passed Against The Assessment Order By Ito-W-29(3)(2) U/S.143(3) Of The Income-Tax Act, 1961 (Hereinafter Referred To As The “Act”), Dated 29.03.2016 For Ay 2013-14. 2. Grounds Taken By The Assessee Are Reproduced As Under: “(I) The Cit(A) Of National Faceless Appeal Centre (Nfac) Has Erred In Confirming The Order Of Assessing Officer. (Ii) The Cit(A) National Faceless Appeal Centre (Nfac) Has Erred In Upholding The Decision Of The Assessing Officer, Thereby Confirming The Denial Of The Benefit Under Section 54F.

For Appellant: Shri Sanjeev Brahme, CAFor Respondent: Shri. Leyaqat Ali Aafaqui, Sr. DR
Section 143(3)Section 54FSection 54F(1)

Hanmandlu Pampati, Karimnagar vs. Income Tax Officer, Ward-2, Karimnagar

In the result, the appeal of the assessee is allowed

ITA 229/HYD/2025[2013-14]Status: DisposedITAT Hyderabad08 Oct 2025AY 2013-14

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdiaआ.अपी.सं / Ita No.228/Hyd/2025 (निर्धारण वर्ष/Assessment Year:2013-14) 1. Shri Srinivas Pampati, Karimnagar. Pan: Abopp0603R Vs. Income Tax Officer, Ward-2, Karimnagar. आ.अपी.सं / Ita No.229/Hyd/2025 (निर्धारण वर्ष/Assessment Year:2013-14) 2. Shri Hanmandlu Pampati, Karimnagar. Pan: Abmpp0324R Vs. Income Tax Officer, Ward-2, Karimnagar. (Appellant) (Respondent) निर्धारिती द्वारा /Assessee By: Shri Lalith Kishore Sharma, Advocate. राजस्व द्वारा / Revenue By: | Dr. Sachin Kumar, Sr-Dr सुनवाई की तारीख / Date Of Hearing: घोषणा की तारीख /Pronouncement: 17/09/2025 08/10/2025 आदेश/Order Per Madhusudan Sawdia, A.M. : These Two Appeals Are Filed By Shri Srinivas Pampati & Shri Hanmandlu Pampati ("The Assessees”), Feeling Aggrieved By The Separate Orders Passed By The Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi (“Ld. Cit(A)"), Dated 04.12.2024 & 05.12.2024 Respectively For The A.Y. 2013-14. Since The Grounds Raised By The Assessees Are Identical, They Are Heard Together & One Consolidated Order Is Being Passed For The Sake Of Convenience & Brevity.

For Appellant: Shri Lalith Kishore SharmaFor Respondent: Dr. Sachin Kumar, SR-DR
Section 144BSection 147Section 148Section 148ASection 154Section 48Section 54F