Joint Ownership of More than One Residential Property Does Not Disqualify Deduction Under Section 54F: ITAT
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed Section 54F deduction of Rs 21.28 crore for investment in a residential unit, stating that joint ownership does not disqualify the assessee from claiming the deduction.
The assessee, Kusum Sahgal, claimed exemption under 54F for Rs 21,28,34,670 on investment in a residential unit at “The Camellias, “DLF, Gurugram, made from long-term capital gains on the sale of shares.
The assessee filed a return declaring an income of Rs 66,14,65,660 for the AY 2016-17. The case was selected for scrutiny under CASS due to large capital gains, large Section 54 deductions, and a foreign asset balance. The AO completed the assessment under Section 143(3), disallowing deduction under Section 54F of Rs 21,28,34,670 and share transfer expenses of Rs 44,10,636. The AO denied the deduction, claiming that the assessee owned more than one residential property at the time of sale. Regarding the second disallowance, the AO held that the assessee had claimed share transfer expenses amounting to Rs 44,10,636, but the bills regarding the claim were not raised under the assessee’s name.
The assessee filed an appeal before the CIT(A), where the CIT(A) deleted the addition of Rs. 44.10 lakh on share transfer expense but upheld the disallowance of Rs. 21.28 crore claimed under section 54F. Therefore, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi.
The assessee argued that they jointly owned more than one residential property on the date of transfer of residential assets, and this does not disqualify them from claiming the Section 54F deduction. The Tribunal cited previous judgements and held that the joint ownership at the time of sale of assets does not disqualify the assessee from claiming a deduction under Section 54F of the Income Tax Act. Therefore, the assessee was allowed to claim the deduction, and the orders of the AO and CIT(A) were quashed.
Case Citation: Kusum Sahgal Vs ACIT (ITAT Delhi); ITA No. 341/Del/2025; 21/11/2025; 2016-17
