No Exemption Under Section 54F if Property Sold Was a Residential One Even Though It Was Let Out to a Bank | ITAT

Case Details: Jai Singh Sethia vs. DCIT/ACIT - [2025] 172 taxmann.com 738 (Jaipur-Trib.)

Judiciary and Counsel Details

• Gagan Goyal, Accountant Member & Narinder Kumar, Judicial Member
• Dheeraj Borad, CA Ld. AR for the Appellant.
• Manoj Kumar, JCIT Ld. DR for the Respondent.

Facts of the Case

Assessee, an individual, sold a house property and claimed the exemption under section 54F as the property was let out to a bank. Assessee contended that the property was commercial in nature as it was given on rent to the State Bank of Bikaner and Jaipur (SBBJ). However, the Assessing Officer (AO) denied the claim of exemption stating that the property was registered as residential property and not as commercial property.

The AO contended that the assessee didn’t furnish any proof that the said property was converted from residential to commercial. The assessee himself declared income from the said property under the head “income from house property” in the return of income.

Aggrieved-assessee preferred an appeal to the CIT(A). The CIT(A) upheld the order of AO, and the matter reached the Jaipur Tribunal.

ITAT Held

The Tribunal held that the assessee admitted to executing the sale deed, in which the immovable property was described as Residential. It was contended that the property had been let out to the Bank since 2009, and from its user, it could not be said that the property was residential in nature.

However, admittedly, the user of the property was never converted by any permission from the competent authority. It was also admitted that in the return of income, the assessee had shown income from rent under the head “Income from House Property”. Thus, the lower authorities were correct in concluding that the provisions of section 54F do not come into application in this case.