Tribunal allows appeal for second flat deduction under section 54, dismissing redundant section 54F claim.

The Tribunal allowed the appellant's appeal, directing the Assessing Officer to allow the deduction under section 54 for the second flat. The Tribunal held that the appellant, despite mistakenly claiming deduction under section 54F, was entitled to the deduction under section 54 as both the transferred and received flats were residential. The claim for deduction under section 54F was dismissed as redundant.

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Issues: Disallowance of deduction claimed under section 54/54F of the Income Tax Act, 1961

Analysis:
1. The dispute in the appeal centered around the disallowance of deduction claimed under section 54/54F of the Income Tax Act, 1961. The appellant, an individual and a Chartered Accountant, owned two flats, one purchased and the other inherited. The inherited flat was part of a re-development agreement where two new flats were received in exchange for the old ones.

2. The Assessing Officer disallowed the deduction claimed under section 54F for the flat inherited from the father, stating it was not initially offered in the return of income. The appellant argued that since the flat was used as an office, it was not shown as a residential property, hence the delay in claiming the deduction. The appellant contended that the Assessing Officer allowed deduction for one flat, so it should be allowed for the other as well.

3. The Departmental Representative argued that the appellant suppressed information about owning another flat and receiving a new one in exchange. The main contention was that since the transferred flat was residential, deduction under section 54F was not permissible.

4. The Tribunal examined the facts and found that the appellant indeed transferred two flats and received two new ones. It disagreed with the lower authorities' reasoning that non-disclosure of ownership disentitles the deduction. The Tribunal held that if the appellant fulfilled the conditions, he should be entitled to the deduction, regardless of the initial non-disclosure.

5. The Tribunal clarified that even if the appellant mistakenly claimed deduction under section 54F instead of section 54, he should not be disallowed if eligible under a different provision. As both the transferred and received flats were residential, the appellant was entitled to deduction under section 54. The Tribunal allowed the additional ground raised by the appellant and directed the Assessing Officer to allow the deduction under section 54 for the second flat.

6. Consequently, the Tribunal allowed the appellant's appeal, dismissing the claim for deduction under section 54F as it became redundant. The decision was pronounced on 6th December 2019.

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