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Tax Relief: Sold Ancestral Land for ₹8 Cr, Bought 2 Properties, Got Tax Notice; How Case Was Won.
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CNBC Awaaz•04-10-2026, 16:25
Tax Relief: Sold Ancestral Land for ₹8 Cr, Bought 2 Properties, Got Tax Notice; How Case Was Won.
- •Tiwari from Panchkula sold ancestral agricultural land for ₹8 crore in 2017 and bought two new properties, claiming tax exemption, but received a tax notice.
- •Tiwari declared a long-term capital gain of ₹7.73 crore and claimed exemptions of ₹2.64 crore under sections 54F and 54B, which the Income Tax Department rejected.
- •The department initially rejected the 54F exemption, considering Tiwari's Dhakoli, Zirakpur property as residential, despite its commercial use as a restaurant and office.
- •The ITAT, after investigation, ruled that the Dhakoli property was commercial, removing the ₹2.64 crore disallowance under 54F, as the restriction applies only to owning more than one residential house, not every type of property.
- •Tiwari also received relief for buying agricultural land in an urban area under 54B, with the ITAT clarifying that land being in an urban area does not automatically make it non-agricultural if it's genuinely used for agriculture.
Key Questions Answered
Tiwari won the tax case after the Chandigarh Income Tax Appellate Tribunal (ITAT) verified that his Dhakoli property was used for commercial business rather than as a residential house, and confirmed that his newly purchased urban plots were actively used for agriculture.
The assessment officer initially rejected the exemptions because he deemed Tiwari's documentation incorrect, incorrectly classified his commercial restaurant property as an extra residential house, and questioned the agricultural status of lands bought in urban areas.
The ITAT ruled that simply owning a property does not qualify it as a residential house, noting that Section 54F restricts owning more than one residential house rather than every type of property.
