Appellate Tribunal allows deduction under section 54F for one residential house.

The Appellate Tribunal overturned the decision of the CIT(A) and allowed the deduction under section 54F of the Income-tax Act, 1961 for the assessment year 2015-16. The Tribunal held that the property received by the assessee, despite having different door numbers for different floors, constituted "one residential house" eligible for the deduction. The case was remanded to the Assessing Officer to grant the deduction in accordance with the Tribunal's ruling, resulting in a successful appeal for the assessee.

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Issues:
Whether the Ld CIT(A) was justified in rejecting the claim for deduction u/s 54F of the Income-tax Act,1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Bangalore concerned the rejection of the claim for deduction u/s 54F of the Income-tax Act, 1961 by the Ld CIT(A) in relation to the assessment year 2015-16. The assessee had sold an immovable property and claimed the deduction of the entire amount u/s 54F. The Assessing Officer (AO) rejected the claim as the assessee had received a building as a gift, consisting of separate units on different floors. The AO considered each unit as a separate house, thereby disallowing the deduction u/s 54F. The Ld CIT(A) upheld this decision, relying on a Tribunal decision. However, it was noted that the Tribunal decision was an ex-parte order and later recalled, rendering the Ld CIT(A)'s reliance on it invalid.

The Tribunal analyzed a similar case where a single property with different door numbers was considered as one residential house. The Tribunal emphasized that the physical structuring of a residential house, whether with multiple independent units or floors, should not impede the allowance of deduction u/s 54F. The Tribunal further highlighted that the requirement is for the building to be residential in nature, not specifically constructed in a particular manner. The Tribunal concluded that the assessee was entitled to claim the deduction u/s 54F for the investment in the property with different door numbers but constituting one residential house.

The Tribunal also addressed a miscellaneous application filed by the revenue, contending that the Tribunal's reliance on previous decisions was incorrect post-amendment in the Act. However, the Tribunal reaffirmed its decision that the property constituted one residential house despite having different door numbers for different floors. The Tribunal emphasized that the property was one single unit, and previous decisions supported this interpretation. The Tribunal clarified that the physical structuring of the property should not hinder the allowance of the deduction u/s 54F.

In conclusion, the Appellate Tribunal set aside the Ld CIT(A)'s decision and held that the house property received by the assessee constituted "one residential house" within the meaning of sec. 54F of the Act. The Tribunal directed the issue to be restored to the AO for allowing the deduction u/s 54F in compliance with its decision, ultimately allowing the appeal of the assessee.

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