Delhi HC allows 54F deduction of Rs 90 Cr, where multiple floors of residential property were purchased
Principal Commissioner of Income-tax – Central vs. Lata Goel – [2025] 174 taxmann
Facts:
1. 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.
2. 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.
Hon Delhi HC held as below:
1. 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.
2. 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.
3. 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.
4. Accordingly, the assessee could not be denied deduction under section 54F on the ground that she held more than one residential unit.
The copy of the Judgment is as under:
