Delhi HC upholds tax deduction for residential property with multiple floors

Subsequently, the AO reopened assessments in 2017, alleging Goel owned “more than one residential house” on the transfer date—specifically, portions of another property co-owned with family members across the basement, second floor, and other floors. The AO disallowed the entire deduction, arguing these floors were separate units.

The High Court rejected this interpretation, citing judicial precedents. It noted that multiple floors or units in a single building, even with independent entries, qualify as one house if used cohesively. “Different floors of a house are not multiple residential houses,” the bench stated, dismissing the Revenue’s appeal.

The court also invalidated the reassessment proceedings, noting Goel had fully disclosed property details in her returns. Reassessments beyond four years require proof of taxpayer non-disclosure, which the AO failed to establish.

This ruling reinforces flexibility in interpreting residential property ownership for tax exemptions. Tax experts highlight its significance for families co-owning multi-floor properties. “The judgment recognises practical ownership structures and prevents undue denial of deductions,” said a tax analyst.

The decision ends a 14-year litigation saga, providing clarity on Section 54F’s scope and reassessment limitations.