Sunil Indravadan Shah Vs ITO (ITAT Mumbai)
Summary: The Section 54F controversy before the Mumbai Bench of the Income Tax Appellate Tribunal concerned whether two residential flats purchased on different floors of the same building and in the same Wing-A could constitute one residential house. The assessee had sold six commercial units between 13.06.2019 and 05.07.2019 for net consideration of Rs.5.32 crore, giving rise to Long-Term Capital Gain of Rs.4,97,90,808/-, and claimed deduction under section 54F. Two flats, A-601 and A-1801, each admeasuring 1,334.19 sq. ft., were purchased from M/s Safal Realtors & Developers Pvt. Ltd. under agreements executed and registered on 29.09.2020, with consideration of Rs.2.65 crore for each flat. The Assessing Officer allowed the deduction for one flat but disallowed Rs.2,51,31,621/- attributable to the second flat, and the CIT(A) upheld the disallowance on the basis that the flats were separate units on different floors with separate entrances and separate stamp duty. The Tribunal considered the ratio of CIT v. Gita Duggal and Pr. CIT v. Lata Goel, and held that separate identification, entrances and stamp duty do not by themselves determine whether the units constitute one residential house. Since both flats were acquired on the same date, from the same developer, in the same building and Wing-A, with identical area and consideration, and the assessee stated an intention to use them as a single residential accommodation, the Tribunal held that the facts justified treating the two flats as one residential house for section 54F. It therefore set aside the CIT(A) order, directed the Assessing Officer to allow the deduction under section 54F in accordance with law, and allowed the appeal.
