The only issue is with respect to disallowance of deduction under section 54 of the Act on the ground that assessee purchased and sold three flats which were converted into one flat. Three separate agreements were entered into for purchase and sale of flats. AO allowed deduction with respect to only one flat and denied deduction for the other two flats. CIT(A) allowed the deduction as three adjoining flats were merged into one residential house by the previous owner and not the assessee. Assessee has used it as one house and there is also only one electricity meter/bill for three flats. CIT(A) relied on the decision of CIT v. Devdas Naik (49 taxmann.com 30). Tribunal upheld the order of the CIT(A) stating that it was a well reasoned order. (AY. 2011-12)
ACIT v. Bipin N. Sagar (2019) 176 DTR 43/ 198 TTJ 649 (Mum.)(Trib.)
S. 54 : Capital gains–Profit on sale of property used for residence– Acquisition of three flats–Converted into one single unit–One electricity meter / bill for the entire residential unit–Deduction could not be denied in spite of there being three separate agreements for purchase and sale of flats, [S. 45]