TaxTMI 
TaxTMI 
2026 (8) TMI 184
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....f Rs. 28.81 Crores in assessment order dated 25.03.2025, we note that the lower appellate discussion under challenge to this effect; reads as under: 5. DECISION: I have perused the record of this proceeding. gone through the facts of the case, the grounds of appeal and the submissions made by the appellant. On the basis thereof, the grounds of appeal raised by the appellant are adjudicated, on the basis of received pleadings, as under: 5.1 1 Ground No. 1 and 2 are general in nature and need no adjudication. These grounds are therefore dismissed. 5.2. The gravamen of the issue, as pleaded by the appellant in the grounds 3 to 5, is that the AO had rejected the appellant' claim of deduction of Rs. 28,81,62,921/- u/s. 54F of the Act on the ground that the appellant had purchased a 2nd independent residential asset on 23.01.2023, i.e., within one year from the date of purchase of original asset, thus, making him ineligible for the claimed deduction of the capital gain upon being hit by the proscription contained in the proviso a(ii) to Section 54F(1) of the Act. 5.3. In the assessment order, the AO had observed that the appellant had purchased 2 a....
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.... (i) ... (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or 5.5. A reading of the statutory litera would show that the section 54F(1) of the Act speaks of one residential house and the construction or purchase of one residential house for offsetting the capital gains. Such offset would fail if another new residential house is acquired within a year of acquisition of the new residential asset. The question that would arise if a literal and pedantic interpretation is provided to this provision. This provision by its plain look would call for a purposive interpretation and one residential house or a new asset would have to be understood in that sense, which has been used in a cognate sense. This is how the courts and tribunals have also interpreted the provision, both prior to and even after the amendment. 5.6. Before proceeding to have a look at them, it would also be important to take a note of some peculiar facts of this case, which would also be necessary to decide the issue herein. In the AY 2023-24, the appellant earned Long Term Capital Gains of Rs. 75,46,30....
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....lable was only 450 sq. metres and therefore, the appellant purchased two adjacent properties (i.e. F8 Sector 44, Noida and F 9 Sector 44, Noida) of 450 sq. metres each (in total 900 sq. metres) with the intent to have a single residential house. The appellant submitted that the initial payments towards the purchase consideration of both properties were made simultaneously, i.e., on 02.05.2022 (Rs. 50 lakhs each) and on 06.05.2022 (Rs. 2 crores each) and around the same time (i.e. May and June 2022), approx. 50% of the purchase consideration was paid by the appellant in respect of both the properties. Thereafter, the registry of the property F-09, Block-F, Sector-44, Noida was made on 13.12.2022 and property F- 08, Block-F, Sector-44, Noida on 23.01.2023. It has been submitted that the time lag in registries of both the properties was because of the timing of transfer permissions granted by the NOIDA Authority to the seller parties. The copies of the two registered deeds, in respect of the properties were submitted before the AO and have also been filed before me. Thus, to summarize, the sequence of events in respect of purchase of adjacent properties is tabulated as under: Sr. N....
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.... Smt. Seema Sharma 12,09,26,384 02.05.2022- Rs. 50 lacs 06.05.2022- Rs. 2 crores 09.01.2023 23.01.2023 Total 26,00,62,921 5.8. The appellant has then submitted that after the registration of adjacent properties, the New Okhla Industrial Development Authority ("NOIDA") vide letter dated 13.4.2023 had amalgamated the two plots. The said amalgamation letter stated that this unit was to be treated as a single property and had prohibited their de-amalgamation again into two plots. The appellant has, therefore, submitted that consequent to the amalgamation ordered by the NOIDA under the abovesaid letter, the said authority had recognized the two properties as a single residential unit. 5.9. The appellant has additionally relied upon an Architect's certificate dated 22.02.2025, wherein the architect has confirmed that F8 and F9, Sector 44, Noida are adjacent house properties, which stand amalgamated, vide order dated 13.04.2023 of the NOIDA. It has also confirmed that two properties have been interlinked/ joined for use as single house property. The appellant had also applied before NOIDA Authorit....
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....as substituted vide Finance Act (No. 2), 2014 to insert 'one' residential house. 5.12. In the present case, the reason for denying the benefit under section 54F of the Act by the AO is the treatment by him of the investment made by the appellant in properties F-8, Sector 44, Noida and F-9, Sector 44, Noida as investments in two house properties to invoke the provisions of the clause a(ii) of the proviso to sub section (1) of section 54 of the Act to thereby hold that the appellant was not entitled for the claim of exemption u/s. 54F of the Act as against the case of the appellant to treat this investment to be in one residential house property. 5.13. The Delhi High Court in the case of CIT v. Gita Duggal [2013] 357 ITR 153 dealt with an akin issue. In this case, the assessee therein had purchased several independent residential units consisting of basement, ground floor, first floor & second floor and had claimed the same them a single unit to seek exemption u/s. 54 of the Act. It had been denied by the AO. The CIT(A) had allowed the claim of the assessee, which was affirmed by the Tribunal. The revenue moved in appeal before the High Court. The High Court....
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.... or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited." 5.14. This judgment of the High Court of Delhi was subsequently affirmed by the apex Court by dismissing the appeal, filed by the revenue vide order reported as the Commissioner of Income-tax v. Gita Duggal [2014] 52 taxmann.com 246. To the same ratio ar....
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.... case of pre 2014 law would hold true even for the post 2015 assessment years, as stated in Lata Goel, supra. This would be even though the Lata Goel was also rendered in the context of the AY 2011-12. This is because the High Court held that the fact that different units or floors may be owned or partly owned would not detract from the fact that the portions owned were required to be considered as 'one residential house'. 5.17. The appellant has referred to the decision of Ahmadabad Bench of Tribunal in case of Mohammadanif Sultanali Pradhan vs. DCIT: 181 ITD 238. This decision was rendered for AY 2015-16. The Tribunal held that the assessee claimed exemption under section 54F of the Act by making investment of long-term capital gain in two bungalows located adjacent to each other and used as one residential unit. The relevant findings of the decision is as under: "7. We have heard the rival contentions of both the parties and perused the materials available on records. There is no dispute to the facts of the case as discussed above. Therefore, we are not inclined to repeat the same for the sake of brevity. The issue in the present case relates whether th....
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....es in two different areas. 7.3 Moreover, the principles laid down by the courts cannot be just brushed aside on the aspect of defining the one residential unit. In this regard we find support and guidance from the judgment of Hon'ble High Court of Karnataka in the case of CIT v. D. Ananda Basappa [2009] 180 Taxman 4/309 ITR 329 wherein it was held as under: 7.4 In view of the above and after considering the facts in totality, we are of the view that the assessee is entitled for the exemption provided under section 54F of the Act in the present facts of circumstances. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is allowed. 8. In the result, the appeal of the Assessee is allowed." 5.18. Reliance is also placed upon decision of Mumbai Bench of the Tribunal in the case of Nakul Aggarwal vs. ACIT, (2024) 167 taxmann.com 540. In that case, the assessee invested gains in two adjacent flats and claimed exemption under section 54F of the Act for the AY 2017-18 (i.e. amended provisions). However, the same was disallowed by the AO on the ground th....
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.... independent agreements for purchase of the flat. The impediment with the assessee at that stage was because, the builder originally got the plan approved as two separate units. The plan was subsequently revised, in order to suit the requirement of the assessee to use it as one single unit. The revised plan very categorically identifies one kitchen and other necessary structures, to be used as a single dwelling unit. The revised plan furnished by the assessee has not been opposed by the revenue with any contrary evidence. Thus, the conditions relevant for claiming deduction under section 54F is fully satisfied in the present facts of the case. 4.7. At this juncture we refer to the Special Bench decision of this Tribunal in case of ITO v. Ms. Shushila M. Jhaveri reported in [2007] 107 ITD 327/ 14 SOT 394 (Mumbai), exemption under section 54 was held to be allowable only in case of purchase of a single house. Entire discussion revolved around interpretation of "a residential house" in section 54. It was had by the Tribunal as under: "The word "a" means "any" which, in turn, means "many" or "more than one". According to various dictionary meanings, it also includes "....
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....estment in multiple houses and applied the amendment effective from 01.04.2015 to invoke the concept of "one residential house" instead of "a residential house". The AO and the CIT(A) held that the judgement of Hon'ble Delhi High Court in the case of CIT vs Gita Duggal 357 ITR 153(Del) was not applicable, post above amendment. 13. We find that the Hon'ble Delhi Court in the Lata Goel in ITA 127/225 vide its order dated 30.04.2025, referring its own decision in the case of Gita Duggal case [supra], had held that multiple residential units may be construed as a single residential house for the purposes of exemption u/s. 54F of the Act and that the term 'a residential house' can be construed as 'one residential house'. It would be pertinent to reproduce the relevant portion of the judgment of the Hon'ble Delhi Court in the case of Lata Goel which is as under: 14. Considering the facts of the case in totality, in light of the decision of the Hon'ble Delhi Court [supra] where the term 'a residential house' has been construed to mean 'one residential house' and that different floors of the house do not mean multiple houses....
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....one residential house both prior to and after 2015 would have to be purposively interpreted to cater to the domestic necessities of the claimant and the same cannot be literally jacketed. The factual matrix in a given case would determine the interpretation and claim in each case. This has been adequately reflected in the read decisions of the courts and tribunal. 5.24. Admittedly, in the present case, there is no dispute regarding the purchase of two houses by the appellant, adjacent to each other, with an intent to amalgamate the same as one residential unit. The AO had found that the appellant had purchased two houses through two independent registries, and therefore, the intention to treat them as one single unit was not satisfied. The perusal of sale deeds, however, showed that the two properties (i.e. F-8, Sector 44 Noida and F-9, Sector 44 Noida) were adjacent to each other and the initial payments towards the purchase of both properties were made by the appellant in the month of May, 2022 wherein an advance of Rs. 2,50,00,000 was paid parallelly. In fact, till June 2022, approx. 50% of the purchase consideration in respect of both the properties was paid by the app....
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.... the properties as a single residential unit and not as separate units. The same also stood confirmed vide certificate from the Architect dated 22.02.2025 filed by the appellant, wherein the architect also confirmed that F8 and F9, Sector 44, Noida were adjacent house properties and had been interlinked/ joined for use as a single house property. 5.27. Further, the AO had observed that on perusal of the drawings, it was noticed that there was a wall between the two plots and there was no space to interlink or amalgamate the two independent residential property/ bungalows. The architect, however, had certified that that the two properties were interlinked/ joined for use as one residential property and copy of drawing certifying that it was single residential unit was submitted before NOIDA Authority vide application number 250217007 on 17.02.2025. In fact, the NOIDA authority, in response, had certified that erection/ re- erection/ alteration / demolition on Plot No. F8 and F9 was completed under the supervision of architect Ashok Kumar and that the building confirms in all respects the requirements of regulation in respect of occupancy. 5.28. In view of the above....
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....g the ITR under section 139(1) of the Act. The AO is therefore directed to verify the deposit and allow the claim made by the of Rs. 2,81,00,000 under section 54F of the Act. This is what leaves the Revenue aggrieved. 3. Both the parties vehemently reiterate their respective stands against and in support of the correctness of the CIT(A) above extracted detailed discussion. Suffice to say, there is hardly any dispute on facts that this assessee; an individual, had admittedly derived long term capital gains amounting to Rs. 7,54,63,654/- from sale of shares on 04.04.2022. There is further no quarrel between the parties that he thereafter made the twin investments in the very much adjacent house properties at Plot No. 8 & 9, Block-F, Sector-44, Noida, involving as many vendors M/s Spoorty Developers (P) Ltd. through its authorized director Smt. Seema Sharma and she herself as an individual on 13.12.2022 & 23.01.2023 for the former and 13.12.2022 qua the latter house, respectively, as tabulated in Para 5.6 hereinabove. It was in this factual backdrop that the learned assessing authority considered the aforesaid twin houses as separate ones to quote section 54F(1)(a & b) r.w....
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....ew that none of them gets attracted in the assessee's case as the facts therein are found to be entirely different since involving various units forming the single residential house or different floors in the same residential house; as the case may be, whereas we have already discussed the entire factual matrix at length that these are two houses which got subsequently amalgamated on 13.04.2023 only. We thus conclude in this factual backdrop that the learned CIT(A) has erred in law and on facts in treating the assessee's residential house property plot No. 8, Block-F, Sector-44, Noida purchased on 23.01.2023 as eligible for section 54F deduction and the Assessing Officer's assessment findings to this extent are hereby restored in very terms. Necessary computation shall follow as per law. No other ground or argument has been pressed before us. 7. This Revenue's appeal is partly allowed in above terms. Order Pronounced in the Open Court on 10.07.2026. ============= Document 1 नवीन ओखला औदà¥à¤¯à¥‹à¤—िक विकास पà¥à¤°à¤¾à¤§à¤¿à¤•....
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.... the it is one single residential unit and is also evident from copy of drawing submitted before Noida Authority vide application reference no. 250217007 on 17.02.2025. 7. That Mr Rahul Garg's residential unit at FB&9, Sector 44, Noida are in compliance of various applicable laws and Noida Building Regulations ,2010 Name of Architect: Tejram Sharma. Registration No. C/A. 46091 Signature of Architect. T. R. SHARMA ARCHITECT REGN. No. CA-46091 fice: OFFICE :- 87/C-2, Sushant Lok, Phase-1, Guru gram. mail: [email protected] , Mobile No. :- 9811221250, 9811694799. Document 3 New Okhla Industrial development Authority Main Administrative Building, Sector-06, Noida-201301, Uttar Pradesh Completion Certificate Date :- Mar 6 2025 From, The Chief Executive Officer New Okhla Industrial Development Authority Noida, Uttar Pradesh To, MR RAHUL GARG F :- 08 09 . Sector :- 44 Ref No. :- 250217007 Council of Architecture Registration No. :- CA/2016/79773 hereby certify that the erection/ re-erection/ alemation / demolization of building on plot number F - 08 09 in Sector 44. Noida completed under the supervision of Architect Name ASHOK KUMAR ....