Bhaskar Prataprai Shah Vs DCIT (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai addressed the appeal of Bhaskar Prataprai Shah regarding the rejection of his Section 54F deduction claim. The case revolved around whether the purchase of a triplex flat, composed of three interconnected units, qualifies as a “single residential house” for tax exemption under Section 54F of the Income-tax Act, 1961. Shah had invested the proceeds from the sale of shares into this property and argued that, despite being composed of three identifiable units, it functioned as a single residential unit. He provided evidence, including floor plans and a sale agreement, to support his claim.
The Assessing Officer (AO) and Commissioner of Income Tax (Appeals) [CIT(A)] denied the deduction, reasoning that the flats had been purchased through separate sale deeds and were identifiable as distinct units. They contended that this arrangement did not meet the legislative intent of Section 54F, which mandates investment in “a residential house.” However, ITAT Mumbai overturned this decision, acknowledging the property’s interconnected nature, including a shared living room and kitchen. The tribunal concluded that the triplex flat satisfied the definition of a single residential unit. Referencing legal precedents and supporting documentation, ITAT ruled in favor of Shah, allowing the deduction under Section 54F.
