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

Dalu Ram Meena, Jaipur vs. ITO Ward 6(5), Jaipur

In the result, result, this appeal of the assessee is allowed for statistical purposes only

ITA 55/JPR/2021[2009-10]Status: DisposedITAT Jaipur13 Oct 2021AY 2009-10

Bench: Shri Sandeep Gosain, Jm & Shri Vikram Singh Yadav, Am Vk;Dj Vihy La-@Ita No. 54 & 55/Jp/2021 Fu/Kzkj.K O"Kz@Assessment Year :2009-10 Dalu Ram Meena, Cuke I.T.O. Vs. Plot No. 34, Surya Vihar, Ward 6(5) Jagatpura, Jaipur-302025. Jaipur. Lfkk;H Ys[Kk La-@Thvkbzvkj La-@Pan/Gir No.: Btupm 8782 M Appellant Respondent Fu/Kzkfjrh Dh Vksj Ls@ Assessee By: Shri Akshay Shah (Ca) Jktlo Dh Vksj Ls@ Revenue By: Shri Aashish Nehra (Addl. Cit-Dr) Lquokbz Dh Rkjh[K@ Date Of Hearing : 13/09/2021 Mn?Kks"K.Kk Dh Rkjh[K@ Date Of Pronouncement : 13/10/2021 Vkns'K@ Order Per: Sandeep Gosain, J.M. Both These Appeals Have Been Filed By The Assessee Against The Separate Orders Of The Ld. Cit(A), National Faceless Appeal Centre (Nfac) Delhi Both Dated 15/03/2021 For The A.Y. 2009-10. The Grounds Taken By The Assessee In Both These Appeals Are As Under: Grounds Of Ita 54/Jp/2021 For The A.Y. 2009-10 “1. That The Subject Order Passed By The Ld. Cit(A) Is Liable To Be Quashed As The Order Is Passed In Haste Manner, Without Taking Into Consideration The Written Submission, Facts, Documents & Evidences As Furnished By Appellant Available On Record. 2. That The Ld. Cit(A) & The A.O. Have Failed To Appreciate That:

For Appellant: Shri Akshay Shah (CA)For Respondent: Shri Aashish Nehra (Addl. CIT-DR)
Section 271(1)(c)Section 54F

Dalu Ram Meena, Jaipur vs. ITO Ward 6(5), Jaipur

In the result, result, this appeal of the assessee is allowed for statistical purposes only

ITA 54/JPR/2021[2009-10]Status: DisposedITAT Jaipur13 Oct 2021AY 2009-10

Bench: Shri Sandeep Gosain, Jm & Shri Vikram Singh Yadav, Am Vk;Dj Vihy La-@Ita No. 54 & 55/Jp/2021 Fu/Kzkj.K O"Kz@Assessment Year :2009-10 Dalu Ram Meena, Cuke I.T.O. Vs. Plot No. 34, Surya Vihar, Ward 6(5) Jagatpura, Jaipur-302025. Jaipur. Lfkk;H Ys[Kk La-@Thvkbzvkj La-@Pan/Gir No.: Btupm 8782 M Appellant Respondent Fu/Kzkfjrh Dh Vksj Ls@ Assessee By: Shri Akshay Shah (Ca) Jktlo Dh Vksj Ls@ Revenue By: Shri Aashish Nehra (Addl. Cit-Dr) Lquokbz Dh Rkjh[K@ Date Of Hearing : 13/09/2021 Mn?Kks"K.Kk Dh Rkjh[K@ Date Of Pronouncement : 13/10/2021 Vkns'K@ Order Per: Sandeep Gosain, J.M. Both These Appeals Have Been Filed By The Assessee Against The Separate Orders Of The Ld. Cit(A), National Faceless Appeal Centre (Nfac) Delhi Both Dated 15/03/2021 For The A.Y. 2009-10. The Grounds Taken By The Assessee In Both These Appeals Are As Under: Grounds Of Ita 54/Jp/2021 For The A.Y. 2009-10 “1. That The Subject Order Passed By The Ld. Cit(A) Is Liable To Be Quashed As The Order Is Passed In Haste Manner, Without Taking Into Consideration The Written Submission, Facts, Documents & Evidences As Furnished By Appellant Available On Record. 2. That The Ld. Cit(A) & The A.O. Have Failed To Appreciate That:

For Appellant: Shri Akshay Shah (CA)For Respondent: Shri Aashish Nehra (Addl. CIT-DR)
Section 271(1)(c)Section 54F

B.Sundararajan, Chennai vs. DCIT, Non Corporate Circle, Chennai

In the result, the appeal filed by the Revenue is dismissed and appeal of the assessee is allowed for statistical purposes

ITA 95/CHNY/2018[2008-09]Status: DisposedITAT Chennai16 Sept 2021AY 2008-09

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. No. 431/Chny/2018 िनधा"रण वष"/Assessment Year:2008-09 The Assistant Commissioner Of Vs. Shri B. Sundararajan, Income Tax, No. 34, Umapathy Street, Non Corporate Circle 18(1), West Mambalam, Chennai 600 033. Chennai 600 034. [Pan:Aasps3969C] (अपीलाथ"/Appellant) (""थ"/Respondent) आयकर अपील सं./I.T.A. No. 95/Chny/2018 िनधा"रण वष"/Assessment Year:2008-09 Shri B. Sundararajan, The Deputy Commissioner Of No. 34, Umapathy Street, Vs. Income Tax, West Mambalam, Chennai 600 033. Non Corporate Circle 18(1), Chennai 600 034. (अपीलाथ"/Appellant) (""थ"/Respondent) Department By : Mrs. V.S. Sreelekha, Cit Assessee By Shri N. Arjunraj, Ca For : Shri S. Sridhar, Advocate सुनवाई की तारीख/ Date Of Hearing : 08.09.2021 घोषणा की तारीख /Date Of Pronouncement : 16.09.2021 आदेश /O R D E R Per Duvvuru Rl Reddy: Both The Cross Appeals Filed By The Revenue As Well As Assessee Are Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals) 15, Chennai, Dated 31.10.2017 Relevant To The Assessment Year 2008-09. 2

For Respondent: Mrs. V.S. Sreelekha, CIT
Section 143(1)Section 143(3)Section 147Section 148Section 54F

Assistant Commissioner of Income Tax Non Corporate Circle 18(1), Chennai vs. Shri. B Sundarajan, Chennai

In the result, the appeal filed by the Revenue is dismissed and appeal of the assessee is allowed for statistical purposes

ITA 431/CHNY/2018[2008-09]Status: DisposedITAT Chennai16 Sept 2021AY 2008-09

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. No. 431/Chny/2018 िनधा"रण वष"/Assessment Year:2008-09 The Assistant Commissioner Of Vs. Shri B. Sundararajan, Income Tax, No. 34, Umapathy Street, Non Corporate Circle 18(1), West Mambalam, Chennai 600 033. Chennai 600 034. [Pan:Aasps3969C] (अपीलाथ"/Appellant) (""थ"/Respondent) आयकर अपील सं./I.T.A. No. 95/Chny/2018 िनधा"रण वष"/Assessment Year:2008-09 Shri B. Sundararajan, The Deputy Commissioner Of No. 34, Umapathy Street, Vs. Income Tax, West Mambalam, Chennai 600 033. Non Corporate Circle 18(1), Chennai 600 034. (अपीलाथ"/Appellant) (""थ"/Respondent) Department By : Mrs. V.S. Sreelekha, Cit Assessee By Shri N. Arjunraj, Ca For : Shri S. Sridhar, Advocate सुनवाई की तारीख/ Date Of Hearing : 08.09.2021 घोषणा की तारीख /Date Of Pronouncement : 16.09.2021 आदेश /O R D E R Per Duvvuru Rl Reddy: Both The Cross Appeals Filed By The Revenue As Well As Assessee Are Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals) 15, Chennai, Dated 31.10.2017 Relevant To The Assessment Year 2008-09. 2

For Respondent: Mrs. V.S. Sreelekha, CIT
Section 143(1)Section 143(3)Section 147Section 148Section 54F