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

Ashwani Kumra, Chandigarh vs. Assistant Commissioner of Income Tax, Chandigarh

The appeal stand allowed for statistical purposes

ITA 718/CHANDI/2024[2013-14]Status: DisposedITAT Chandigarh07 Oct 2025AY 2013-14

Bench: Hon’Ble Shri Laliet Kumar, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No. 718/Chandi/2024 (िनधा"रण वष" / Assessment Year: 2013-14) Shri Ashwani Kumra Acit-Ward 2(1) बनाम/ Sco 338, Motor Market Aaykar Bhawan, Sector-17 Vs. Manimajra – 160101 Chandigarh – 160017 "ायीलेखासं /. जीआइआरसं /. Pan/Gir No. Adppk-2516-H (अपीलाथ"/Appellant) : (""थ" /Respondent) अपीलाथ"कीओरसे/Appellant By : Sh. Deepak Aggarwal (Advocate) – Ld. Ar ""थ"कीओरसे/Respondent By : Shri Vivek Vardhan (Addl. Cit) – Ld. Sr. Dr सुनवाईकीतारीख/Date Of Hearing : 22-09-2025 घोषणाकीतारीख /Date Of Pronouncement : 07/10/2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Assessee For Assessment Year (Ay) 2013- 14 Arises Out Of An Order Of Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [Cit(A)] Dated 15-05-2024 In The Matter Of An Assessment Framed By Ld. Assessing Officer [Ao] U/S. 144 R.W.S. 147 Of The Act On 29-03-2022. The Sole Issue That Arises For Our Consideration Is Computation Of Capital Gains. Having Heard Rival Submissions & Upon Perusal Of Case Records, The Appeal Is Disposed-Off As Under. The Assessee Has Also Filed Written Submissions Which Have Duly Been Considered While Adjudicating The Appeal.

For Appellant: Sh. Deepak Aggarwal (Advocate) – Ld. ARFor Respondent: Shri Vivek Vardhan (Addl. CIT) – Ld. Sr. DR
Section 143(1)Section 144Section 148Section 263Section 54Section 54F

Pravanshu Samantaray, Cuttack vs. The Income Tax Officer, Ward-1(1), Cuttack

In the result, appeal of the assesee is allowed

ITA 369/CTK/2025[2018-19]Status: DisposedITAT Cuttack24 Sept 2025AY 2018-19

Bench: Shri George Mathan & Shri Rajesh Kumarआयकर अपील सं/Ita No.369/Ctk/2025 (नििाारण वर्ा / Assessment Year : 2018-2019) Pravanshu Samantaray, Vs Ito, Ward-1(1), Cuttack C/O : Adikanda Samantaray, At: Rajabagicha,Po Telenga Bazar Dist : Cuttack-753009 Pan No. : Acxps 7565 D (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. नििााररती की ओर से /Assessee By : Shri P.K.Mishra, Sr. Dr राजस्व की ओर से /Revenue By : Shri Vijay Singh, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 24/09/2025 घोषणा की तारीख/Date Of Pronouncement : 24/09/2025 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of Ld.Cit(A), National Faceless Appeal Centre(Nfac), Delhi, Dated 29/04/2025, For The Assessment Year 2018-2019. 2. It Was Submitted By The Ld. Ar That The Assesee Owned One Residential House Representing A Flat In Bhubaneswar Where The Assesee Is Staying. The Assesee Is Also Deriving Rental Income From A Commercial Property Jointly Owned By The Assesee & His Brothers & Sisters. It Was The Submission That The Commercial Property Was Received By The Assesee On The Demise Of His Father. It Was The Submission That The Said Commercial Property Was A Joint Owned Property With The Brothers & Sisters Of The Assesee. It Was The Submission That The Assesee Also Owned

For Appellant: Shri P.K.Mishra, Sr. DRFor Respondent: Shri Vijay Singh, Sr. DR
Section 4Section 54ASection 54F