Gain arising on sale of office-cum-residential structure eligible for exemption u/s 54F relief and not u/s 54: ITAT

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  • Last Updated on 24 May, 2022

exemption u/s 54F

Case Details: Chain Singh Mundra v. ITO - [2022] 138 105 (Chandigarh-Trib.)

Judiciary and Counsel Details

    • Smt. Diva Singh, Judicial Member & Vikram Singh Yadav, Accountant Member
    • Smt. Komal Thakur, Adv. for the Appellant.
    • Smt. Priyanka Dhar, Sr. DR for the Respondent.

Facts of the Case

The assessee had sold a property comprised of an industrial plot of land with an office-cum-residential structure built upon it. The assessee claimed exemption under section 54 on long-term capital gains arising on it.

The Assessing Officer (AO) denied the claim of exemption on grounds that the property sold by the assessee was an industrial plot. However, he allowed a deduction under section 54F and accordingly recomputed LTCG.

On appeal, the CIT(A) also upheld the order of AO. The aggrieved assessee filed an instant appeal to the tribunal.


The Tribunal held that on perusal of the sale deed executed by the assessee, it was noticed that what has been transferred is an industrial plot along with construction thereon. Therefore, as borne out from the contents of the sale deed, it is clear that what has been transferred is an industrial plot (along with the construction thereon) and not a residential plot.

Further, on perusal of the valuation report submitted by the assessee, it was noted that the subject property was located in an industrial area with a covered area. The construction was carried out in form of the parking area, office space, residential and recreational area covering the basement, ground floor, and first floor.

The office area is built on the ground floor consisting of RCC framed structure, aluminum windows, and vitrified tile flooring. The residential area is on the first floor with a covered area having bathrooms, wooden doors, and windows.

Thus, where on an industrial plot of land, there is an office built-up area on the ground floor and a residential built-up area on the first floor, it couldn’t be said that the assessee had transferred a residential house. Accordingly, the assessee was not eligible for exemption under section 54 but it was rather eligible for exemption under section 54F.

List of Cases Reviewed

    • Navin Jolly v. ITO [2020] 117 323/272 Taxman 348/424 ITR 462 (Kar.) (para 10) distinguished.

List of Cases Referred to

    • Navin Jolly v. ITO [2020] 117 323/272 Taxman 348/424 ITR 462 (Kar.) (para 5)

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