Multiple Flats in Different Floors cannot be treated as Single Residential House for computing Capital Gain Exemption: ITAT grants Partial Relief [Read Order]

The Income Tax Appellate Tribunal (ITAT), Cuttack bench has held that the multiple flats in different floors of the same building cannot be treated as a single residential house for the purpose of capital gain exemption under section 54F of the Income Tax Act, 1961.

The assessee, Ms. Jayashree Sahoo was in possession of three flats as one house and is occupying all the three flats. The assessee contended that Flat No.201 & 202 are conjoint and Flat No.301 is above Flat No.201 and connected through common staircase. The assessee claimed that for all the three flats, a single electric connection was being operated. It was further submitted that as the assessee is retired from the Air force, no holding tax was leviable in Odisha in respect of three flats.

Based on the above, the assessee claimed exemption under section 54F of the Act in respect of cost of construction of all three flats and the Assessing Officer disallowed the claim of exemption u/s.54F because the assessee had constructed three residential houses in two different floors and denied the assessee exemption u/s.54F of the Act.

A division bench of the Tribunal comprising Shri George Mathan, Judicial Member and Shri Arun Khodpia, Accountant Member observed that according to the physical verification report and remand report it is clear that the assessee has acquired Flat Nos.201 & 202 as a single unit and Flat No.301 on the upper stair is not connected to Flat No.201 & 202 owned by the assessee.

Denying the exemption, the Tribunal concluded that “Consequently, as the assessee has constructed one residential house being the combination of both Flat Nos.201 & 202, the assessee is entitled to the benefit of exemption u/s.54F of the Act in respect of Flat Nos.201 & 202 to be considered as one. The assessee is not entitled to the benefit of exemption u/s. 54F of the Act in respect of Flat No.301.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.