Appeal granted: Entire land & house eligible for deduction under section 54F

The Tribunal allowed the appeal, ruling in favor of considering the entire land acquired through four separate sale deeds and the construction of the house as eligible for deduction under section 54F of the Income-tax Act. The judgment emphasized the merged plot as a single unit for residential purposes, regardless of the number of original land parcels. The decision was pronounced on January 3, 2020, in favor of the assessee.

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Issues:
Disallowance of claim under section 54F of the Income-tax Act in respect of multiple plots of land merged into one for construction of a residential house.

Analysis:
The appeal pertains to the disallowance of a claim under section 54F of the Income-tax Act for the assessment year 2009-10. The Tribunal recalled an earlier order for fresh hearing based on the relevance of decisions not considered previously. The key issue is the denial of deduction for the cost of acquisition of multiple plots of land merged into one for constructing a residential house. The assessee contended that all four plots were merged into one, and the investment for the entire land and house construction should be considered for the deduction. The Assessing Officer limited the deduction to one plot only. The Tribunal examined the facts and relevant legal precedents to determine the eligibility for deduction.

The Tribunal noted that the assessee purchased four plots of land on the same day, merged them by constructing a boundary wall around all four plots, and left only one entrance gate. The merged plot was considered part of the residential house constructed on a portion of the land. Legal precedents were cited to support the contention that the construction of a residential unit on a bigger plot of land entitles the assessee to deduction under section 54F. The Tribunal emphasized that the focus should be on the purchase of land and construction of the house, not on the number of land parts acquired. Once the separate plots were merged into one, the entire investment in the land and house construction became eligible for deduction under section 54F.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of considering the entire land acquired through four separate sale deeds and the construction of the house as eligible for deduction under section 54F. The judgment emphasized the importance of the merged plot as a single unit for residential purposes, regardless of the number of original land parcels. The decision was pronounced on January 3, 2020, in favor of the assessee.

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