Multiple Floors Count as One House for Section 54F Relief | HC

Case Details: Principal Commissioner of Income-tax - Central vs. Lata Goel - [2025] 174 taxmann.com 535 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru & Tejas Karia, JJ.
• Ruchir Bhatia, Adv. for the Appellant.

Facts of the Case

The assessee, an individual, filed her return of income for the relevant assessment year, declaring the income and claiming a deduction under Section 54F. In response, the Assessing Officer (AO) issued a notice for scrutiny assessment during the assessment proceedings.

AO noticed that the assessee purchased different floors of a residential property. Considering different floors of a residential property as more than one residential property, AO denied the claim of deduction under section 54F.

The matter reached the Delhi High Court.

High Court Held

The High Court held that the configuration of ownership of the property, as recorded in the municipal corporation records, does not lead to the conclusion that there was any failure on the assessee’s part to disclose the material facts relevant for claiming the deduction. The assessee had fairly disclosed the sale of the original asset, for which capital gains had arisen, as well as the house property purchased from the sale proceeds.

Section 54F requires the assessee to acquire a residential house. This condition will be considered satisfied if the assessee acquires a building which, for the sake of convenience, is constructed in such a manner that it comprises multiple units. These units should be capable of being used, if necessary, as separate and independent residences. As long as this condition is met, the requirement under Section 54F shall be deemed to have been fulfilled.

Nothing in section 54F requires the residential house to be constructed in a particular manner. The only requirement is that it must be for residential use, not commercial. If nothing in the section requires that the residential house be built in a particular manner, the Income-tax authorities cannot insist upon that requirement.

Accordingly, the assessee could not be denied deduction under section 54F on the ground that she held more than one residential unit.

List of Cases Reviewed

• Mrs. Lata Goel v. ACIT [ITA No.3426/Del/2019,dated 25.09.2024] [Para 26] affirmed

List of Cases Referred to

• CIT v. D. Ananda Basappa [2009] 180 Taxman 4/309 ITR 329 (Karnataka) (para 20)
• Pawan Arya v. CIT [2011] 11 taxmann.com 312/200 Taxman 66 (Punjab & Haryana) (para 21)
• CIT v. Gita Duggal [2013] 30 taxmann.com 230/214 Taxman 51/357 ITR 153 (Delhi) (para 22)
• Mrs. Kamla Ajmera v. Pr. CIT [2024] 169 taxmann.com 119 (Delhi) (para 23)
• CIT v. Gumanmal Jain [2017] 80 taxmann.com 21/394 ITR 666 (Madras) (para 24).