Joint Ownership in Residential Property Doesn’t Bar Section 54F Exemption | ITAT

Case Details: Kusum Sahgal vs. ACIT - [2025] 180 taxmann.com 720 (Delhi-Trib.)

Judiciary and Counsel Details

• Vimal Kumar, Judicial Member & S Rifaur Rahman, Accountant Member
• Sanjay Kumar Jain, CA & Saurav Jain, Adv. for the Appellant.
• Kailash Dan Ratnoo, CIT (DR) for the Respondent.

Facts of the Case

The assessee sold shares of a company and invested the sale proceeds in purchasing a residential property. She claimed a deduction under section 54F for the investment in the residential house.

During the assessment proceedings, the Assessing Officer (AO) observed that the assessee held a 50% share in a residential property along with her husband. Therefore, she owned more than one residential property. Consequently, the AO denied the deduction under section 54F. On appeal, the CIT(A) upheld the additions made by the AO.

The matter reached the Delhi Tribunal.

ITAT Held

The Tribunal noted that the assessee had claimed a deduction under section 54F(1) for the investment made in a residential unit, which was part of an ongoing construction project by DLF. The record further showed that the assessee owned a commercial flat and also had a property in Mehrauli, which was agricultural land governed by the DLR Act, 1954, and she did not hold ownership rights despite being in possession. Therefore, this land was classified as agricultural, not residential. The Noida flat, in which the assessee held a 50% share, was the only residential property she owned at the time of selling the original asset.

In light of these material facts, and following the judicial precedents relied upon, the Tribunal held that joint ownership of a residential property at the time of sale of the original asset does not disentitle the assessee from claiming a deduction under section 54F. Accordingly, the orders of the Assessing Officer and the Commissioner (Appeals) were set aside.

List of Cases Reviewed

• ITO v. Sheriar Phirojsha Irani [IT Appeal No. 2835/Mum./2024, dated 27-09-2024] (para 9) Followed.

List of Cases Referred to

• ITO v. Sheriar Phirojsha Irani [IT Appeal No. 2835/Mum./2024, dated 27-09-2024] (para 9).