Landmark Judgement : Investment in Farm House is eligible for deduction under section 54 of Income Tax Act

Deduction – Capital Gain – Investment in FARM HOUSE  is eligible for deduction under section 54 of Income Tax Act :

The expression ‘residential house’ used in s. 54F has not been defined. The popular meaning of the word ‘house’ is a place or building used for habitation of man. “Residential house” is a dwelling house as distinct from a house of business, warehouse, office, shop, etc. In other words, residential house is a building used as place of abode in which people reside or dwell in contra-distinction to one which is used for commercial or business purposes. A farm house is also a residential house.

Shyam Sunder Makhija Vs. ITO [38 ITD 125 (JAIPUR ITAT)] A farm house, according to the dictionary meaning, is a farmer’s house attached to a farm

ACIT Vs. Om PrakashGoyal [ 53 SOT 158 (JAIPUR ITAT)] Benefit of s. 54F cannot be denied on ground that land on which construction was done was agricultural in nature–All the conditions for claiming exemption u/s. 54F have been found satisfied–It is established that assessee purchased a plot of land and then constructed a residential house on it–House constructed on agricultural land or on other land does not matter, but the fact that house should be constructed–Therefore, order of CIT (A) confirmed–Revenue’s appeal dismissed

ITAT – Jaipur IN Ito, Jaipur vs Saroj Devi Agarwal, Jaipur on 5 October, 2017-ITA No. 397/JP/2016