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Tribunal Upholds Tax Relief After Agricultural Land Reinvestment Dispute
Sushil Tiwari sold family farmland for ₹8 crore.
He said he had used some of the money to buy other properties and asked for tax relief.
A tax officer rejected both of his claims.
An appeals authority allowed one claim but rejected the other, partly because it viewed a property in Dhakoli as a home.
Tiwari said that property was used for business, not as a home.
The tribunal ordered officials to check how the properties were used and what kind of land he had bought.
The checks confirmed the Dhakoli property was used commercially and the new land was agricultural.
The tribunal said being in an urban area alone did not prevent the land from qualifying for relief, and ruled substantially in Tiwari’s favour.
Sushil Tiwari sold ancestral agricultural land for ₹8 crore on September 18, 2017.
He claimed about ₹6.36 crore in exemptions under Sections 54B and 54F after reinvesting sale proceeds.
The assessing officer disallowed both claims, while the Commissioner of Income Tax (Appeals) later allowed Section 54B relief but rejected Section 54F.
The Income Tax Appellate Tribunal directed a physical verification, which confirmed that Tiwari’s Dhakoli property was used commercially and his replacement properties were agricultural land.
The tribunal ruled that an urban location alone did not disqualify land from Section 54B relief and ruled substantially in Tiwari’s favour on September 1, 2026.
- Who
- Sushil Tiwari and the Income Tax Department.
- What
- The Income Tax Appellate Tribunal ruled substantially in Tiwari’s favour over claimed capital-gains tax exemptions under Sections 54B and 54F.
- Where
- The case was heard by the Income Tax Appellate Tribunal in Chandigarh and concerned properties including one in Dhakoli and replacement land in Chhat and Sanoli villages in Punjab.
- When
- The tribunal ruling was dated September 1, 2026; Tiwari sold the land on September 18, 2017.
- Why
- The dispute concerned whether Tiwari qualified for tax relief after reinvesting sale proceeds, including whether a property was residential and whether urban-located land could qualify as agricultural land.
Taxpayer’s position
Tax department’s position
Dhakoli property and Section 54F
Taxpayer’s position
Tiwari argued that the Dhakoli property was commercial, used for a restaurant and office, and should not count as a residential house.
Tax department’s position
The assessing officer disallowed the claim for insufficient supporting documents; the appeals authority treated the Dhakoli property as one of Tiwari’s residential properties.
Urban location and Section 54B
Taxpayer’s position
Tiwari argued that he reinvested in agricultural land and presented purchase deeds; verification confirmed the land’s agricultural nature.
Tax department’s position
The tax department objected that the replacement properties were in an urban area.
Key facts
- Sale price
- ₹8 crore
- Sale date
- September 18, 2017
- Reported long-term capital gains
- ₹7.73 crore
- Exemptions claimed
- Approximately ₹6.36 crore: ₹2.64 crore under Section 54F and ₹3.73 crore under Section 54B
- Replacement land purchases
- ₹80 lakh on July 2, 2018, and ₹45 lakh on August 1, 2018
- Tribunal decision
- September 1, 2026
Sources
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