Joint ownership of more than one house does not automatically defeat Sec 54F exemption: ITAT Delhi

 

Kusum Sahgal v. ACIT, ITAT Delhi, ITA No. 341/Del/2025

Facts:

1.  The assessee, Ms. Kusum Sahgal, held 24.59% shares in Quality Needles Pvt. Ltd. During A.Y. 2016-17, she sold 21,50,000 shares of the company and earned long-term capital gains (LTCG).

2.  Against this LTCG, she claimed Section 54F exemption by investing about ₹21.28 crore in a new residential property – an under-construction flat in “The Camellias”, DLF.

3.  The Assessing Officer (AO) denied the Section 54F of the IT Act, exemption, on the ground that the assessee already owned more than one residential house on the date of transfer – including properties jointly owned with family members.

4.  ITAT examined whether joint/co-ownership of other residential houses bars the assessee from claiming Section 54F exemption.

ITAT Delhi held as below:

1.  Co-ownership does not automatically amount to owning a “residential house” for the purpose of the restrictive proviso under Section 54F.

2.  There was no evidence that the assessee had exclusive ownership or that the other co-owned properties generated taxable “income from house property” in her hands.

3.  When conflicting non-jurisdictional High Court decisions exist, the view favourable to the assessee should be adopted.

4.  On this basis, it is held that the assessee did not own more than one residential house within the meaning of Section 54F proviso.

5.  Consequently, the assessee is eligible for Section 54F exemption on her investment in the new residential property.

The copy of the order is as under:

1763704498-X64GGn-1-TO