Sells ancestral land for 8cr, pays no tax, wins case
Mr Tiwari sold his ancestral agricultural land in Panchkula for Rs 8 crore on September 18, 2017, and reinvested the proceeds into two properties in Chhat and Sanoli villages. He claimed tax exemptions under Section 54B and Section 54F of the Income Tax Act, 1961. However, during the assessment, the Assessing Officer disallowed his tax exemptions, resulting in a tax addition of approximately Rs 6.36 crore.
Tiwari appealed the decision to the Income Tax Appellate Tribunal (ITAT) Chandigarh, which ultimately ruled in his favor on September 1, 2026. The ITAT held that the Dhakoli property, owned by Tiwari where his restaurant and office were located, could not be considered a residential house for the purpose of claiming Section 54F tax exemption, as the restriction under Section 54F applies only to residential houses.
Additionally, the ITAT upheld Tiwari's claim under Section 54B, allowing him to claim tax exemption on the long-term capital gains from the sale of agricultural land reinvested in purchasing other agricultural land.
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