Investment in Multiple Residential Units Considered as One if Purchased Through Single Sale Deed | ITAT

Case Details: Suruchi Jena vs. ACIT - [2024] 166 taxmann.com 632 (Cuttack-Trib.)

Judiciary and Counsel Details

• George Mathan, Judicial Member & Manish Agarwal, Accountant Member
• S.K. Sarangi, CA for the Appellant.
• S.C. Mohanty, Sr. DR for the Respondent.

Facts of the Case

Assessee sold four pieces of land during the relevant assessment year and received a certain consideration. She entered into an agreement with a builder to purchase four flats, which were situated on a single floor of the building and booked the flats as one unit. The aforesaid flats were allotted to the assessee and the payments for the acquisition of the flats were made.

The assessee claimed deduction under section 54F in the return of income by treating the cost of acquisition of the flats as a new residential house. However, the Assessing Officer (AO) disallowed the assessee’s claim on the ground that the assessee had purchased more than one residential unit, i.e., four flats since the assessee had purchased four flats.

On appeal, CIT(A) confirmed the order of AO. Aggrieved assessee filed the instant appeal before the Cuttack Tribunal.

ITAT Held

The Tribunal held that the entire sale consideration received by the assessee was invested in the acquisition of the four flats, and the payments were made to the builder through an account payee cheque within the prescribed time limit. It was also undisputed that the builder allotted four flats to the assessee in the relevant assessment year.

The claim over these flats of the assessee became final when it had made the payment of the sale consideration, and the builder had earmarked the flats as allotted to the assessee. It was also a fact that though there were four flats, the builder, as well as the assessee, treated them as a single unit. Further, the flats were on one floor and used as a single residential unit. These four flats were registered through a single sale deed and treated as one unit.

While disallowing the assessee’s claim, the AO observed that the flats were registered four years after the sale. However, he failed to appreciate that the flats were allotted to the assessee in the relevant assessment year itself, i.e., the year when the capital assets were sold by the assessee against which the deduction under section 54F is claimed.

Since all four flats were constituted as a single residential unit and allotted by the builder as such, though having four identification numbers, they can be termed as one residential unit for the purpose of claiming deduction under section 54F. Accordingly, the assessee was eligible for deduction for the entire cost of four flats under section 54F against the sale consideration received from the sale capital asset.

List of Cases Reviewed

• Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/225 Taxman 239/365 ITR 389 (SC)(para 6) followed.

List of Cases Referred to

• Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/225 Taxman 239/365 ITR 389 (SC) (para 6).