Nakul Aggarwal Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that where two houses joint together constitutes a single unit for residence, then exemption under section 54F of the Income Tax Act would be available to such joint residential house.
Facts- The assessee is an individual. The case was selected for scrutiny to verify deduction/exemption from capital gains, investment in immovable property and foreign asset. AO observed that, the assessee claimed deduction u/s. 54F and purchased two flats. AO was of the opinion that the assessee violated the provisions of section 54F by purchasing two flats as against one as required under section 54F. AO recomputed the claim of assessee by disallowing the long term capital gain invested in both the flats.
CIT(A), after considering the documents filed by the assessee allowed the claim in respect of one of the houses on pro-rata basis and directed AO to re-compute the deduction u/s. 54F of the Act. Being aggrieved, both assessee and revenue has preferred the present appeal.
Conclusion- Special bench in the case of ITO vs. Ms. Shushila M. Jhaveri held that exemption under section 54/54F would be available in respect of one house only. But where two houses joint together constitutes a single unit for residence, then exemption under section 54 would be available to such joint residential house. It was noted that, where two units are distantly situated, then it could not constitute to be “a residential house” and, therefore, exemption under section 54 will be available only to one residential house at the option of the assessee.
