Gireesh Bhalla : Capital Gains

Would an assessee, who had invested the capital gains acquired from sale of two commercial properties in the purchase of a ground floor and first floor, which constitutes a single residential unit in two deeds, be entitled to deduction under section 54F of the Income Tax Act.

The assessee sold two commercial properties and had invested the capital gain within the stipulated period in a group housing complex in the ground floor and the first floor of the same property. The assessee contended that both the premises in fact constituted one residential unit, there was only one staircase, which was internal and led to the first floor. There was no independent entry to the first floor. There was only one kitchen in the entire house. It did not matter that the two floors had been purchased by separate agreements, the first floor was purchased just one day after the purchase of the ground floor. 

The Assessing Officer held that the assessee was not entitled for deduction under section 54F of the Income Tax Act, 1961 as she had purchased two distinct residential properties.  The Commissioner (Appeals) held that what the assessee had was, in fact, one residential unit and not two, making the assessee eligible for claiming deduction under section 54F of the Act and that even if it were to be held otherwise i.e. that there were two different residential units, the assessee would be eligible for deduction under section 54F of the Act, since both these units, were adjacent to each other, being the ground floor and the first floor of the same premises. 

On appeal, the Tribunal while dismissing the appeal, held that the Commissioner (Appeals) after consideration the confirmation from the developer stating that the house was indeed a single unit and persuing the lease deed had arrived at the conclusion that what the assessee had in her possession was one single residential unit and not two, comprising two floors of one and the same double storeyed residential house. There was no error in the order passed by the Commissioner (Appeals)-Asstt. C.I.T. VS SUDHA GUR 700 [2011] 7 ITR (TRIB) 653 ( DELHI).