This is a summary of a legal case involving deduction u/s 54F of ...

Tribunal Allows Tax Deduction for Multiple Flats as Single Residence u/s 54F, Overturns Prior Denials.

August 23, 2024

Case Laws     Income Tax     AT

This is a summary of a legal case involving deduction u/s 54F of the Income Tax Act for investment in residential property. The key points are: The assessee invested sale proceeds from a plot of land in three flats (two 1-BHK and one 2-BHK) located side-by-side on the same floor to create a joint living space. The Assessing Officer denied deduction u/s 54F, interpreting it to mean a single residential unit. However, the Tribunal held that the expression "a residential house" in Section 54F does not require it to be a single unit, as long as the units can be conveniently used as an independent residence if needed. The only requirement is that it should be for residential and not commercial use. The Tribunal also allowed deduction for the amount kept in a bank account for registration of the flats, treating the booking of flats with a builder as "construction" and not purchase. Since registration was done after construction within the stipulated time, the amount kept for registration was considered part of the allowable deduction u/s 54F. The Tribunal set aside the orders of the lower authorities, allowing the assessee's appeal and the claim for deduction u/s 54F.

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