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Section 54 benefits available on house built on contiguous plots: Experts

If adjacent apartments are purchased from a developer, make the modifications to convert them into one unit

Topics
Income tax | Property tax | income tax law

Bindisha Sarang 



income tax
What the ITAT judgement has once again reinforced is that a homebuyer can claim Section 54 exemption even if he builds a house by purchasing multiple plots

Recently, the Income-Tax Appellate Tribunal (ITAT), Delhi, ruled in favour of a person whose father had sold his old house and used the proceeds to purchase three adjacent plots on which he built a large house in Gurgaon that could accommodate his entire family. Under Section 54 of the Income-Tax (I-T) Act, tax exemption is permissible on the purchase of ‘a residential property’. The point of contention in this case was whether a house built on three plots (which, in fact, has three residential units but within a single compound wall) is eligible for Section 54 deduction. The tax authorities were of the view that exemption should be allowed on only one of the three. The ITAT, however, allowed the exemption on the entire house.

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First Published: Tue, September 13 2022. 21:14 IST

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