Sec 54

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Mohit Narang (Querist)

19 September 2017 Can purchase of two flats adjacent be claimed under sec 54 under capital gain post amendment 2015 and is there any case law regarding same

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

19 September 2017 In CIT vs D Ananda Basappa 309 ITR 329 (Kar.), where multiple flats were purchased in the same complex and were used as one unit. In this case, the tax exemption was allowed. A special leave petition filed by the income tax department against this decision, was also rejected by the Supreme Court. Hence, it can be reasonably inferred that even after the amendment of Section 54 and 54F, providing for exemption from long-term capital gains tax, only if the investment is made in one residential house property, one can still invest in more than one house and claim the tax exemption, provided the tax payer can prove that all such flats are used as a single residential unit by the family. In the abovementioned case, two residential units were purchased, which were separated by a strong wall and were purchased from two different vendors under two separate sale deeds. The exemption was still granted to the tax payer, because both the flats were capable of being used as a single residential unit.

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