Deduction under Section 54 of ITA cannot be denied as long as there is a Residential unit

Last updated: 22 July 2014

Court :
Bombay High Court

Brief :
n this appeal, the order passed by the ITAT confirming that of the Commissioner of Income Tax was questioned. The assessee had bought 3 flats, one in his own name, another in the name of his wife and his own and the third in the name of his wife. The Assessee had claimed deduction under section 54 of the IncomeTax Act, 1961 on purchase of 2 flats, under two distinct agreements and from different sellers, in which he was either the sole owner or one of the joint owners. It was noted by both,the ITAT and the CIT, that the map of the general layout plan as well as internal layout plan in regard to flat no.s 103 and 104 indicate that there is only one common kitchen for both the flats. The flats were constructed in such a way that adjacent units or flats can be combined into one. the Appellate Court laid down that it is an admitted fact that the flats were converted into one unit and for the purpose of residence of the Assessee. It is in these circumstances, the CIT held that the acquisition of the flats may have been done independently but eventually they are a single unit and house for the purpose of residence. The Appellate Court upheld the reliance placed by the ITAT on the order passed by it in the case of Ms. Sushila M. Jhaveri. The language of the section was noted and it was reiterated that so long as there is a residential unit or house, then the benefit or deduction cannot be denied. In the instant case, the court held the flats to be a single unit. The Appeal did not raise any substantial question of law and was held liable to be dismissed. No order as to costs were made.

Citation :
Commissioner of Income Tax 21, Mumbai 400 051 v/s Devdas Naik