Section 54- Investment in residential house
Several disputes are in existence as to whether an assessee can buy more than one house under provisions of section 54 of the Income-tax Act, 1961. In the recent times High Courts and ITAT have taken a consistent view that in order to avail the exemption u/s 54 of the Act, investment in a “residential house” is required to be made. Here a residential house means a “dwelling unit”, which may encompass more than one flat or living places, if all of them together are meant for one family for living together. It is submitted that permitting investment of the sale proceeds in more than one house properties when the need of housing is increasingly felt due to increase in population, would be a step in the right direction. Even otherwise, investment upto Rs. 50,00,000 is encouraged and allowed u/s 54EC of the Act.
It is suggested that a provision be introduced whereby acquisition of more than one house be eligible for exemption u/s 54.
Source- Pre-Budget Memorandum 2014 on direct taxes by Institute of Chartered Accountants of India