1986 (1) TMI 138 - AT - Income Tax

Summary

Issues Involved:
1. Interpretation of "a house property" u/s 54 of the Income-tax Act, 1961.
2. Eligibility for exemption u/s 54 for multiple residential units.

Summary:

1. Interpretation of "a house property" u/s 54 of the Income-tax Act, 1961:
The appellant sold his residential flat for Rs. 2,37,000 and purchased four flats in the same building for Rs. 1,77,750. The appellant claimed that these four flats together constituted "a house property" u/s 54, arguing that the term should include multiple residential units in the same building. The ITO allowed exemption for only one flat, and this decision was upheld by the Commissioner (Appeals), who noted that the appellant did not reside in the other three flats.

2. Eligibility for exemption u/s 54 for multiple residential units:
The Tribunal examined whether the four flats could be considered as a single house property for the purpose of exemption u/s 54. The appellant's counsel argued that the flats, though on different floors, were used as a single residence with a common kitchen and ration card. The Tribunal referred to several judicial precedents, including the Allahabad High Court's decision in Shiv Narain Chaudhari v. CWT and the Calcutta High Court's decision in B.B. Sarkar v. CIT, which supported the view that multiple self-contained units could be considered a single house if they were used as such.

The Tribunal concluded that the four flats purchased by the appellant in the same building for his residence should be regarded as "a house property" u/s 54. The Tribunal noted that the appellant and his family lived in these flats as a single unit, fulfilling the conditions for exemption. Therefore, the Tribunal directed the ITO to allow the full deduction of Rs. 1,77,750 in the computation of capital gains u/s 54(1).

Conclusion:
The appeal was allowed, and the appellant was granted full relief u/s 54 for the entire amount invested in the four flats.