Tribunal limits tax deductions for multiple houses, remits tenant compensation, disallows fees. Appeals partly allowed.

The Tribunal held that deductions under Section 54 of the Income Tax Act were limited to one residential house unless multiple units were combined into a single unit. Compensation paid to tenants was remitted for verification in all cases, while brokerage and advocate fees were disallowed unless withdrawn. All appeals were partly allowed for statistical purposes.

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Issues Involved:
1. Eligibility for deduction under Section 54 of the Income Tax Act, 1961 for multiple residential properties.
2. Allowability of expenses such as brokerage, compensation paid to tenants, and advocate fees in computing Capital Gains.

Detailed Analysis:

Issue 1: Eligibility for Deduction under Section 54 for Multiple Residential Properties

The appellants, co-owners of an ancestral bungalow, sold the property and claimed deductions under Section 54 of the Income Tax Act, 1961, for investments in multiple residential properties. The Assessing Officer (AO) allowed the deduction for only one property, leading to appeals.

- Appellant 1 (ITA No. 146/PUN/2015): The appellant invested in two flats located in different localities and claimed deductions for both. The AO restricted the deduction to one flat, and this was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)). The Tribunal noted that the deduction under Section 54 is available for "a residential house," interpreted by courts to mean one house. The Tribunal found no evidence supporting the appellant's claim of family compulsion to buy two flats in different localities. Therefore, the appellant was eligible for deduction for only one flat, and the appeal was dismissed.

- Appellant 2 (ITA No. 147/PUN/2015): The appellant invested in three flats in the same building, with two adjacent flats on the 11th floor and one on the 2nd floor. The AO restricted the deduction to one flat. The Tribunal held that the appellant could claim deduction for two adjacent flats if they were combined into one residential unit. The case was remitted to the AO for verification of whether the two flats were joined into a single unit. The appeal was partly allowed for statistical purposes.

Issue 2: Allowability of Expenses in Computing Capital Gains

- Appellant 1 (ITA No. 146/PUN/2015): The appellant claimed expenses for brokerage, compensation to a tenant, and advocate fees. The AO disallowed these expenses. The CIT(A) upheld the disallowance. The Tribunal remitted the issue of compensation paid to the tenant back to the AO for verification, as the appellant provided an affidavit from the tenant. The appeal was partly allowed for statistical purposes.

- Appellant 2 (ITA No. 147/PUN/2015): The appellant claimed compensation paid to a tenant. The Tribunal remitted the issue back to the AO for verification, similar to the decision in ITA No. 146/PUN/2015. The appeal was partly allowed for statistical purposes.

- Appellant 3 (ITA No. 148/PUN/2015): The appellant claimed compensation paid to a tenant and brokerage fees. The Tribunal remitted the issue of compensation back to the AO for verification. The appellant withdrew the ground regarding brokerage fees. The appeal was partly allowed for statistical purposes.

Conclusion:

The Tribunal consistently held that deductions under Section 54 are restricted to one residential house unless multiple units are combined into a single residential unit. The issue of compensation paid to tenants was remitted back to the AO for verification in all relevant appeals. Brokerage and advocate fees were generally disallowed unless explicitly withdrawn by the appellant. All appeals were partly allowed for statistical purposes.

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