ITAT Nagpur Allows Section 54F Deduction Where Company Property Was Not Assessee’s Own

Surekha Diliprao Dhole Vs ITO (ITAT Nagpur)

A Company’s House Is Not Its Director’s House – Section 54F Cannot Ignore the Corporate Veil Only to Deny Exemption

The Nagpur Bench of the ITAT has held that a residential property owned by a company cannot be treated as a house owned by its director while determining eligibility for exemption u/s 54F. A company is a separate legal entity, and mere directorship does not confer ownership over its assets.

The Tribunal also recognised that section 54F does not prohibit an assessee from owning one other residential house on the date of transfer. The restriction applies only where the assessee owns more than one residential house, other than the new asset.

The assessee, Surekha Diliprao Dhole, claimed deduction of ₹14,70,000 u/s 54F for AY 2015-16. Her case was reopened on the allegation that the deduction had been wrongly claimed because she allegedly owned more than one residential house on the relevant date.

After considering the assessee’s submissions, the AO identified three residential properties which, according to him, were owned by the assessee. These were a house situated at Onkar Nagar, Nagpur; a property at 77, Pushpkunj Complex, Central Bazar Road, Ramdaspeth, Nagpur; and Flat No. 102, Devshree Apartment, Cement Road, Nagpur.