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2015 (9) TMI 1010 - AT - Income TaxRevision u/s 263 - CIT-II, Pune directing disallowance of deduction u/s.54F alleging that deduction needs to be allowed on purchase of only one flat and not a house property containing 2 combined flats - Held that:- There is no dispute to the fact that the assessee in the instant case has invested her long term capital gain in acquisition of 2 adjacent flats bearing Flat Nos. 13 and 14 in the project Magnolia vide purchase deed dated 17-07- 2008 for a total consideration of ₹ 77,82,600/-. We find the AO, in the body of the assessment order, allowed deduction u/s.54F at ₹ 69,12,528/- being the proportionate deduction u/s.54. While allowing deduction u/s.54F at ₹ 69,12,528/- the AO had also rejected the claim of deduction u/s.54(2) made by the assessee at ₹ 77,82,600/-. A copy of the purchase deed was also before the AO. Therefore, it cannot be said that the AO has not applied his mind on the issue of applicability of deduction u/s.54F on account of 2 adjacent flats. Since at the prevailing time various decisions were available to the proposition that where more than one units are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen etc. then it would be a case of investment in one residential house and consequently the assessee would be entitled to deduction u/s.54F. It is the settled proposition of law that for invoking the jurisdiction u/s.263 the twin conditions namely, the order is erroneous and the order must be prejudicial to the interest of the revenue must be satisfied. In the instant case the order of the AO may be prejudicial to the interest of the revenue but it cannot be said to be erroneous since various judicial decisions support the case of the assessee that the assessee is entitled to deduction u/s.54F in respect of 2 adjacent units - Decided in favour of assessee.
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