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

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section 54F multiple residential units

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

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied