Section 54F exemption denied where property with a bungalow and related structures was treated as a residential house.

Section 54F exemption was denied where the Vishubag property was held to be a residential house on the evidence available. Although the assessee claimed agricultural and dairy use, the record showed a separately built bungalow, manager's office, workers' residence, storehouse and cow shed, and no reliable supporting material such as property tax records or electricity details was produced to prove a non-residential character. The claimed agricultural or commercial income was also not reflected in the return. The property was therefore treated as a residential house, the assessee was considered to have more than one residential house on the transfer date, and the exemption claim failed.

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Issues: Whether the assessee was entitled to exemption under section 54F of the Income-tax Act, 1961, in respect of the capital gains investment, and whether the Vishubag property could be treated as a non-residential agricultural/commercial property so as to avoid the bar in the proviso to section 54F.

Analysis: The assessee claimed that the Vishubag property was used for agricultural and dairy activities and therefore was not a residential house. The record, however, showed that the property contained a separately built residence/bungalow, manager's office, workers' residence, storehouse and cow shed. The assessee did not produce supporting material such as property tax records or electricity details to establish that the bungalow was not a residential house, and the alleged agricultural or commercial income was not reflected in the return of income. On these facts, the property was treated as a residential house and the assessee was found to have more than one residential house on the date of transfer of the original asset.

Conclusion: The denial of exemption under section 54F was upheld and the assessee's claim failed.

Final Conclusion: The addition made by the assessing authority stood confirmed, and the appeal was rejected on merits.

Ratio Decidendi: For the purpose of section 54F, a property shown by the evidence to contain a residential bungalow and other dwelling-related structures will be treated as a residential house unless the assessee substantiates a contrary non-residential character with reliable proof.

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