INCOME TAX ACT, 1961

Section 54F

Capital gains - Deduction under section 54F - Denial of deduction on allegation that assessee constructed multiple residential units -

Assessee was aggrieved by denial of deduction claimed under section 54F. Revenue alleged that except for making submission that construction of residential building was started by assessee, he failed to furnish any proof in support of this claim such as vouchers and bills for purchase of construction materials, payment of labour charges, etc. Revenue further alleged that building having multiple floors amounted to multiple residential units and was not eligible for deduction under section 54F. Held: One may build a house consisting of four bedrooms (all in same or in different floors) or in such a manner than an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. There may be several such considerations for a person while constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction under section 54/54F.Assesse in principle, was entitled for deduction under section 54F in respect of investment made in property subject to production of other relevant evidence by the assessee before AO. Assessee was directed to produce all relevant evidences in support of the claim of deduction under section 54F.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2015-16

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