Putting Together Structure Of Plywood Sheets Can't Be Construed As Constructing 'Residential House' For Claiming Capital Gain Exemption: Delhi HC

The Delhi High Court ruled that constructing a structure of plywood sheets cannot be considered building a residential house for claiming capital gains exemption under Section 54 of the Income Tax Act. The court upheld an ITAT order disallowing the exemption to the assessee, who had built a makeshift structure on agricultural land. The court noted that a residential house must have basic amenities like a boundary wall, kitchen, washroom, bedroom, electricity, and water connections. The assessee’s structure lacked these features and was deemed insufficient for habitation. The court emphasized that the intent of Section 54 is to promote genuine residential construction, not temporary or makeshift arrangements. This decision clarifies the requirements for claiming capital gains exemption and reinforces the need for substantial construction to qualify for tax benefits.