Section 54F exemption fails where the assessee already owns multiple residential units on the date of new property purchase.

Section 54F exemption was denied because, on the date of purchase of the new asset, the assessee was already holding more than one residential house through a registered joint development arrangement and other house property interests. Although 24 residential units had been allotted under the agreement, several flats had already been sold and six units remained unsold when the new property was acquired, so the statutory condition that the assessee should not own more than one residential house on the relevant date was not met. The plea based on section 53A of the Transfer of Property Act, 1882 did not alter that result. The disallowance was therefore sustained.

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Issues: Whether the assessee was entitled to exemption under section 54F of the Income-tax Act, 1961 when, on the date of purchase of the new asset, he was already holding multiple residential units under the joint development arrangement and other house property holdings.

Analysis: The assessee had entered into a registered joint development agreement under which he was allotted 24 residential units in exchange for transfer of his land rights. The record showed that 15 flats had been sold in the earlier year and 3 more during the relevant year, while 6 residential units remained unsold when the new property was purchased. The assessee was also shown to own other house property interests. On these facts, the condition in section 54F that the assessee should not own more than one residential house on the relevant date was not satisfied. The plea based on section 53A of the Transfer of Property Act, 1882 did not assist the assessee in the face of the existing ownership of multiple residential units.

Conclusion: The assessee was not eligible for exemption under section 54F, and the disallowance was upheld.

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