Tribunal affirms deduction claim under section 54F for unified property, rejects Revenue's multiple house disqualification argument

The Tribunal upheld the Assessee's claim for deduction under section 54F of the Income-tax Act, emphasizing the unified nature of the property despite separate door numbers. It rejected the Revenue's argument that owning more than one house would disqualify the Assessee from claiming the deduction. The Tribunal clarified that the property constituted a single residential house, aligning with the legislative intent of the provision. Additionally, the Tribunal dismissed the Revenue's request for rectification of errors in its order, maintaining the correctness of its original decision.

---

---

Issues:
- Claim of deduction u/s. 54F of the Income-tax Act, 1961 for capital gain on sale of property.
- Interpretation of owning more than one house for deduction eligibility.
- Rectification of errors in the Tribunal's order under section 254(2) of the Act.

Analysis:
1. Claim of Deduction u/s. 54F:
The case revolved around the Assessee's entitlement to claim deduction u/s. 54F of the Income-tax Act for capital gain on the sale of a property at HSR Layout, Bangalore, reinvested in a property at N.R. Colony. The Revenue argued that owning more than one house would disqualify the Assessee from claiming the deduction. The Tribunal analyzed the property purchase details and concluded that despite having different door numbers for the ground and first floor, it constituted a single property. The Tribunal referred to a Delhi High Court case where flats on different floors were considered one property, supporting the Assessee's claim.

2. Interpretation of Owning More Than One House:
The Revenue contended that post-amendment by the Finance Act, 2014, the phrase "a residential house" was substituted with "one residential house" in section 54F. However, the Tribunal found no mistake in its order, emphasizing that the property in question was a single residential house despite having different owners for the ground and first floor. The Tribunal highlighted that the property was bifurcated for convenience but constituted a unified property. It reiterated that the Assessee had purchased only one property, aligning with the legislative intent of the deduction provision.

3. Rectification of Errors in Tribunal's Order:
The Revenue sought rectification of the Tribunal's order under section 254(2) of the Act, alleging an apparent mistake due to the post-amendment language change. The Tribunal dismissed the petition, stating that its findings were based on factual analysis and legal interpretation, not constituting an apparent mistake. It clarified that the power under section 254(2) is not for reviewing decisions but rectifying clear errors on record. The Tribunal upheld its original decision, emphasizing the unity of the property and the Assessee's eligibility for the deduction.

In conclusion, the Tribunal upheld the Assessee's claim for deduction u/s. 54F, emphasizing the unified nature of the property despite separate door numbers. The judgment highlighted the legislative intent behind the provision and rejected the Revenue's plea for rectification, affirming the correctness of its original order.

---