Tribunal Limits Deduction to One Flat, Rejects Notional Garage Sale Value

The Tribunal upheld the restriction of deduction under section 54 to one residential flat, in line with the Jurisdictional High Court's precedent. The notional assessment of the garage sale value was deemed unjustified, resulting in a partial allowance of the appeal.

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Issues:
1. Rejection of claim for deduction u/s 54 of the Act in respect of second house property.
2. Assessment of sale value of garage on notional basis.

Analysis:

Issue 1: Rejection of claim for deduction u/s 54 of the Act in respect of second house property:
The appellant sold a residential property and invested in two residential properties. The AO restricted the deduction claim to one property based on a Tribunal decision. The appellant argued that buying two flats was necessary for family needs and cited precedents where "a residential house" was interpreted to include multiple houses. The appellant also relied on a 2014 amendment and a High Court decision post-amendment. The DR argued for deduction for one residential flat only, citing specific case laws. The Tribunal noted the Special Bench's decision and the Jurisdictional High Court's approval, emphasizing that deduction is available for one residential house only. As the purchased flats were not contiguous, the Tribunal upheld the CIT(A)'s decision, following the Jurisdictional High Court's ruling.

Issue 2: Assessment of sale value of garage on notional basis:
The AO assessed the sale value of garages without concrete evidence, leading to a notional assessment. The Tribunal found this assessment unjustified and set aside the CIT(A)'s decision. The alternative view of excluding garage costs from the 1981 cost was also deemed speculative. Consequently, the Tribunal partially allowed the appeal, ruling in favor of the assessee on this issue.

In conclusion, the Tribunal upheld the restriction of deduction u/s 54 to one residential flat, following the Jurisdictional High Court's precedent. The notional assessment of garage sale value was deemed unwarranted, leading to a partial allowance of the appeal.

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