How A Delhi Woman Saved Rs 93 Lakh Under Section 54F Despite Not Getting House On Time

A case of a Delhi-based woman has come to notice, where the Delhi Income Tax Appellate Tribunal (ITAT) granted the judgment in her favour to get exemption under Section 54F despite not having possession of her new property within the prescribed time. The person named Rajni was able to save Rs 93 lakh capital gain tax, which was earlier flagged by the tax department.

Before diving deeper into the full case, it’s important to understand the section 54F under income tax act, 1961. Section 54F of the Income Tax Act, 1961 gives tax exemption on long-term capital gains (LTCG) when a person sells a capital asset (like land, shares, or gold) and invests the sale proceeds in a residential house.

What’s Rajni Case?

Rajni had sold a capital asset for Rs 1.25 crore. After adjusting indexed costs and transfer expenses of Rs 32.42 lakh, her long-term capital gain (LTCG) came to Rs 92.57 lakh. Then she used the proceeds to build a residential property through multiple payments in 2016.

Investment trail (within months)

May 27, 2016: ₹13,27,100

Aug  08, 2016: ₹52,55,316 (TDS-adjusted)

Oct  07, 2016: ₹59,71,950 (TDS-adjusted)

Total paid: ₹1,25,54,366 = 136% of LTCG

Rajni wasn’t able to construct the residential property within stipulated timeline, according to Sujit Bangar, founder of Tax buddy. However, construction never took off due to NHAI takeovers, corridor disputes, Dwarka Expressway delays, and pollution curbs imposed by the NGT.

She never had the possession of

that residential purchase despite giving the whole amount. Later, she surrendered the unit in 2022, received a refund of Rs 1.65 crore, and promptly reinvested in another property worth Rs 2.10 crore — showing consistent housing intent.

The Assessing Officer (AO) flagged the issue and disallowed her to tax exemption under Section 54F, saying that possession or construction wasn’t completed within the statutory period.

However, the ITAT overruled this, stating that beneficial provisions should be read liberally, and invoking the doctrine of impossibility — the law cannot compel what’s impossible.

Rajni claimed a capital gains exemption of ₹93 lakhs

However, the land she purchased was compulsorily acquired by NHAI

Income-tax asked her to pay a tax of ~₹18.6 lakhs

But here’s how the Tribunal ruled in her favour🧵👇 pic.twitter.com/5SfUtLbiRB

— Sujit Bangar (@sujit_bangar) October 3, 2025

According to Sujit Bangar, the tribunal emphasised that intent and complete fund deployment matter more than physical possession. Citing precedents like Sanjeev Lal (SC) and Girish L. Ragha (Bom HC), it reaffirmed that taxpayers should not be penalised for delays beyond their control.

Rajni was able to get the exemption under Section 54F and was able to reduce LTCG from Rs 92,57,020 to Rs 0.