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

Mr. Anil Bherumal Kalal, Mumbai vs. ITO -19(2)(1), Mumbai

In the result, substantial ground of appeal raised by assessee is allowed

ITA 1189/MUM/2025[2006-07]Status: DisposedITAT Mumbai21 Apr 2025AY 2006-07

Bench: Shri Pawan Singh(Physical Hearing) Mr. Anil Bherumal Kalal Ito – 19(2)(1), Mumbai A-602, Pooja Enclave, S T Braz Road, Kautilya Bhavan, Bkc, Vs. Behind Nanavati Hospital, Vile Parle Bandra (East), Mumbai – West, Mumbai-400056. 400051. Pan: Aabpk 3216 B (Appellant) (Respondent) Assessee By : Shri Subhash Chhajed, Ar Revenue By : Ms. Pradnya Gholap, Sr. Dr Date Of Hearing : 16.04.2025 Date Of Pronouncement : 16.04.2025 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh: 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A) Dated 30.12.2024 For A.Y. 2006-07. The Assessee Has Raised The Following Grounds Of Appeal: “Validity Of The Notice Under Section 143(2) Of The Act & The Assessment Thereunder: 1.A) On The Facts & In The Circumstances Of The Case & In Law, The Learned Commissioner Of Income Tax (Appeals) [Cit (A)] Erred In Upholding The Assessment For The Assessment Year 2006-07 Framed By The Learned Assessing Officer Without Complying With The Relevant Provisions Of The Law. B) It Is Respectfully Submitted That No Notice Under Section 143(2) Of The Act Was Served On The Appellant Within The Time Limits Prescribed Under Section 143(2) Of The Act. Accordingly, The Learned Assessing Officer Had No Jurisdiction To Proceed With Scrutiny Assessment Under Section 143(3) Of The Act. Thus, The Assessment Is Bad In Law & Deserves To Be Quashed & Struck Down As Null & Void. In View Of The Above, The Appellant Prays That The Assessment Be Set Aside As Bad In Law & Struck Down As Null & Void.

For Appellant: Shri Subhash Chhajed, ARFor Respondent: Ms. Pradnya Gholap, Sr. DR
Section 143(2)Section 143(3)Section 144Section 254(1)Section 54FSection 69

Barminco Indian Underground Mining Services LLP, Delhi vs. DCIT, Circle-28(1), Delhi

In the result, appeal of the Revenue is dismissed

ITA 2253/DEL/2022[2020-21]Status: DisposedITAT Delhi04 Apr 2025AY 2020-21

Bench: Shri Vikas Awasthy & Shri Avdhesh Kumar Mishraआअसं.2253/िद"ी/2010(िन.व. 2006-07) Deputy Commissioner Of Income Tax, Circle-31(1), R. No. 1405, 14Th Floor, E-2 Block, Pratyakshkar Bhawan, Civic Centre, Jln Marg, ...... अपीलाथ"/Appellant New Delhi बनाम Vs. Niranjan Koirala, 27, Akbar Road, New Delhi ..... "ितवादी/Respondent Pan: Aaupk-0483-B Assessee By : Shri Tarandeep Singh, Advocate Department By : Shri Manoj Kumar, Sr. Dr सुनवाई क" ितिथ/ Date Of Hearing : 23.05.2025 घोषणा क" ितिथ/ Date Of Pronouncement : : 19.08.2025 आदेश/Order Per Vikas Awasthy, Jm: This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-Xxx, New Delhi (Hereinafter Referred To As 'The Cit(A)') Dated 18.02.2010, For Assessment Year 2006-07. 2. This Appeal Was Decided By The Tribunal Vide Order Dated 20.07.2018. Thereafter, The Revenue Filed Miscellaneous Application Seeking Rectification In The Order Of Tribunal On The Ground That The Additional Grounds Of Appeal Raised By The Revenue Vide Application Dated 13.08.2014 Remained To Be Decided. The Tribunal In Ma No. 732/Del/2018 Vide Order Dated 10.07.2023 Recalled The Order

For Appellant: Shri Tarandeep Singh, AdvocateFor Respondent: Shri Manoj Kumar, Sr. DR
Section 54F

Piyush Kumar Bagla, Hathras vs. Jurisdiction Assessing Officer, WD.-4(3)(4), Hathras

The appeal stand allowed

ITA 43/AGR/2021[2018-19]Status: DisposedITAT Agra28 Mar 2025AY 2018-19

Bench: Hon’Ble Shri Satbeer Singh Godara, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No. 43/Agr/2021 (िनधा"रणवष" / Assessment Year: 2018-19) Shri Piyush Kumar Bagla Ito, Nfac बनाम/ 2, Court Of Wards Compound Delhi Vs. Aligarh "थायीलेखासं./जीआइआरसं./Pan/Gir No.Agqpb-8087-J (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri Deepak (Advocate) - Ld. Ar ""थ"कीओरसे/Respondent By : Shri Shailendra Shrivastava – Ld. Sr. Dr सुनवाईकीतारीख/Date Of Hearing : 12-02-2025 घोषणाकीतारीख /Date Of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Assessee For Assessment Year (Ay) 2018-19 Arises Out Of An Order Of Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [Cit(A)] Dated 12-04-2021 In The Matter Of An Intimation Issued By Cpc U/S 143(1) On 21-05-2019. Having Heard Rival Submissions, The Appeal Is Disposed-Off As Under. 2. From Impugned Order, It Could Be Seen That The Assessee Sold 4 Properties During The Year & Reflected Long Term Capital Gains Of Rs.12.15 Lacs. However, Cpc Computed Capital Gains Of Rs.16.85 Lacs Thereby Increasing The Gains By Rs.4.69 Lacs. The Ld. Cit(A)

For Appellant: Shri Deepak (Advocate) - Ld. ARFor Respondent: Shri Shailendra Shrivastava – Ld. Sr. DR
Section 143(1)Section 54F