Tribunal allows claim for multiple residential units under section 54, overturning disallowance.

The Tribunal allowed the appellant's claim under section 54, holding that "a residential house" can include multiple residential units. The Tribunal determined that the amendment in section 54 was not applicable retrospectively, thus allowing the deduction for investing in two residential flats. The appeal was allowed, and the disallowance of the claim under section 54/54F was overturned.

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Issues:
Challenge to disallowance of claim made under section 54/54F of the Income Tax Act for investing in two houses instead of one residential unit.

Analysis:
1. The appellant challenged the order of the ld. CIT(A) sustaining the disallowance of the claim made under section 54/54F of the Act by the Assessing Officer. The appellant sold a residential house and invested in two flats, leading to the disallowance.

2. The Assessing Officer disallowed the claim as the appellant invested in two flats instead of one residential unit. The ld. CIT(A) upheld this disallowance citing the amendment in section 54 effective from 01.04.2015, replacing "a residential house" with "one residential house in India."

3. The appellant contended that the amended legal position in section 54 was not applicable for the assessment year under consideration. The appellant argued that the two units purchased were adjacent to each other and should be considered for deduction under section 54 as per the law applicable in the relevant year.

4. The Tribunal analyzed the legal position and relevant precedents. Referring to the decision in V.R. Karpaam v. ITO, the Tribunal held that "a residential house" can be construed in plural, allowing for investment in multiple residential units. Following this interpretation, the Tribunal allowed the appellant's claim under section 54.

5. The Tribunal found that the amendment in section 54 was not applicable retrospectively for the assessment year in question. As per legal interpretations and precedents, the Tribunal concluded that the appellant's investment in two residential flats should be considered for deduction under section 54. Therefore, the impugned order was not sustained, and the appeal of the assessee was allowed.

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