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2026 Supreme(Online)(ITAT) 9947
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
S Rifaur Rahman, Accountant Member, Vimal Kumar, Judicial Member
Ashok Bansal – Appellant
Versus
DCIT – Respondent
ITA No.5568/Del/2025
For the Appellants/Petitioners: V P Gupta, Anunav Kumar
For the Respondents: Harpreet Kaur Hansra
The Tribunal held that capital gains exemption under Section 54F is available if investment is made within the time limits prescribed under Section 139(4), that an undivided share in a single property does not disqualify an assessee, and that each capital asset is treated separately for tax exemption purposes.
Headnote:(A) Income Tax Act, 1961 - Section 54F - Exemption of Long-Term Capital Gains - Investment in residential house - Limitation for utilization of sale consideration - Assessee claimed exemption under Section 54F by investing in a new residential property - Revenue argued that utilization must occur before the due date under Section 139(1) of the Act, whereas Assessee contended Section 139(4) also applies - Held, utilization of sale consideration for purchase or construction of a new residential house within the time limit provided under Section 139(4) is sufficient for claiming Section 54F exemption. (Paras 5.2, 7.3, 7.5)
(B) Income Tax Act, 1961 - Section 54F - Ownership of residential house - Assessee owned 1/3rd undivided share in a property - Revenue contended exclusion due to ownership of more than one residential house - Held, ownership of an undivided share in a single contiguous property constitutes only one residential house and does not disqualify the assessee from claiming exemption under Section 54F. (Paras 5.3, 9)
(C) Income Tax Act, 1961 - Section 54F - Scope of 'Asset' - Computation of Capital Gains - Revenue contended that all shares sold must be considered collectively - Held, Section 54F exemption is available on capital gains arising from the transfer of any long-term capital asset; shares of different companies constitute separate assets and should be dealt with individually for exemption purposes. (Para 11)
Facts of the case:
Assessee sold shares of unlisted companies and earned long-term capital gains, investing the proceeds into a residential house. The Assessing Officer denied the Section 54F exemption, alleging non-compliance regarding the time limit for investment and ownership of multiple residential properties. The Commissioner (Appeals) upheld the denial. The Assessee appealed, providing evidence of timely payment to the builder and that the alleged multiple properties were actually one undivided family property.
Findings of Court:
The Tribunal found that investment made within the time limit of Section 139(4) qualifies for exemption. It ruled that the Assessee did not own more than one house, as the property was a single contested undivided structure. It further clarified that capital gains on individual assets should be calculated separately under Section 54F without forcing aggregation of loss-making assets.
Issues: Whether the exemption under Section 54F is allowable for investments made up to the date under Section 139(4); whether ownership of undivided share in a house disqualifies an assessee under Section 54F; and whether capital gains must be aggregated across all assets sold.
Ratio Decidendi: Utilization of sale consideration within the extended time for filing returns (Section 139(4)) satisfies the statutory requirement for Section 54F. Ownership of a portion of a single contiguous property does not constitute ownership of 'more than one' house. Each long-term capital asset is independent for Section 54F purposes.
Result: Appeal of the assessee is allowed.
| Table of Content |
|---|
| 1. procedural background and facts leading to the assessment dispute. (Para 1 , 2 , 3) |
| 2. arguments regarding the timeframe for utilizing capital gains under section 54f and section 139(4). (Para 4 , 5) |
| 3. final ruling and acceptance of the assessee's claims based on law and evidence. (Para 7 , 8 , 13 , 14) |
| 4. determination that ownership of an undivided share in a single house does not disqualify section 54f exemption. (Para 9 , 10) |
| 5. principle that individual capital assets are treated separately for section 54f computation. (Para 11 , 12) |
O R D E R
PER VIMAL KUMAR, JM:
The appeal filed by the assessee is against the order dated 15.07.2025 of the Ld. Commissioner of Income Tax (Appeals)-26, New Delhi (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of assessment order dated 19.12.2018 of the Ld. Assessing Officer/ITO Ward-10(2), New Delhi(hereinafter referred to as “Ld. AO”), u/s 143(3) of the Act for Assessment Year 2016-17.
2. Brief facts of the case are that, assessee filed return of income of Rs.2,34,320/- on 30.03.2017. The return was processed u/s 143(1) of the Act. The case was selected for Limited Scrutiny through CASS. The scope of assessment proceedings was “Whether deduction from capital gains has been claimed correctly”. Notice u/s 143(2) of the Act dated 18.09.2017 was issued. On request of assessee, the assessment proceedings was converted to manual/conventional mode with the approval of the competent authority.
2.1. Sh. Nitin Gupta, CA & AR attended proceedings, filed details/documents.
2.2. On completion of proceedings, Ld. AO vide order dated 19.12.2018 made addition of Rs.5,60,68,722/- on account of Long Term Capital Gains.
3. Against order dated 19.12.2018 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 15.07.2025.
4. Being aggrieved, appellant-assessee preferred present appeal on following grounds of appeal:-
1. That CIT(A) erred in passing the order dated 15.07.2025 dismissing the appeal of the Appellant without considering facts, submissions and legal position in respect of each of the grounds in appeal before him and upholding the order of assessment passed by the Assessing Officer dated 19.12.2018 and therefore, same is not justified and legally sustainable.
2. That CIT(A) failed to appreciate that proceedings u/s 143(2) of the Act were not validly initiated in the case of the Appellant and order of assessment passed by the Assessing Officer dated 19.12.2018 was not legally sustainable.
3. That CIT(A) erred in upholding the disallowance of claim of the Appellant u/s 54F of the Act in respect of Long-Term Capital Gain of Rs.5,43,92,935/- as revised during the course of assessment proceedings by submitting revised computation of exemption instead of amount of Rs.5,60,68,722/- claimed in the return of income without considering and appreciating correctly facts, submissions and the legal position explained by the Appellant.
4. That CIT(A) erred in not correctly appreciating that unlisted shares under reference were duly held by the Appellant and same were sold during the year ended 31.03.2016 relevant to assessment year under appeal for total sale consideration of Rs. 7,88,92,060/- earning long-term capital gain of Rs.7,59,49,924/- against which exemption was claimed u/s 54F of Rs.5,43,92,935/- pursuant to investment in purchase of residential house of Rs.5,65,00,000/- before filing return of income on 30.03.2017 i.e. within the time allowed for filing return in terms of section 139(4) of the Act and therefore, exemption u/s 54F for the aforesaid amount of long-term capital gain was duly allowable.
5. That CIT(A) failed to appreciate that in terms of sub-section (4) of section 54F of the Act the Appellant was required to deposit the amount in capital gain account only if same has not been utilised for purchase or construction of a residential house before due date for f
