Deduction u/s 54F Not Eligible for Investment Made in two Differently Placed Properties

Omkar Chadha Vs ITO (ITAT Delhi)

The issue under consideration is whether the investment made in two different properties out of the capital gains is eligible for deduction u/s 54F?

ITAT states that there has been an amendment in the provisions of the Act wherein “a residential house” has been amended as “one residential house” and argued that this amendment is clarificatory in nature, hence the case laws mentioned are no more applicable to the instant case. Relying on the judgment of the Hon’ble Jurisdictional High Court in the case of CIT Vs Rajendera Kumar, the ld. DR argued that any amendment which was introduced to rationalized and clear the existing ambiguity and doubts are to be treated as retrospective in nature. In the instant case, the issue is different from what has been examined in the case laws cited by the ld. Counsel of the assessee. In all the situations, the Courts upheld the deduction in the situations where the multiple units were either adjacent or on the same floor or on the different floors or multiple units in the same residential complex owing to division of property. Whereas in the instant case, there was no such division of property among the members and the investments are at different locations one being the investment in residential property at Jungpura of Rs.24,20,000/- and the other being at Ansal properties in NCR. No case law has been brought to our notice wherein two distinctly placed properties have been allowed for claim of deduction u/s 54F. Keeping in view, the geographical distances, the investment in two differently placed properties cannot be termed to be “a residential house” even after resorting to liberal interpretation of “a residential unit”. All the case laws relied by the counsel are found to be factually different from the instant case. Hence, keeping in view, the provisions of Section 54F, the amendments, the ratio of judgments, the AO was justified in restricting the assessee’s claim exemption under section 54F to investment in one residential property only.

FULL TEXT OF THE ITAT JUDGEMENT

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