Taxpayers owning more than one residential floor/unit on the date of transfer of a capital asset other a residential house would lose eligibility for section 54F deduction. By the Delhi Tribunal decision in [2025] 181 taxmann.com 381 (Delhi – Trib.)[09-12-2025] multiple independent floors with separate kitchens—even within the same building shall be treated as separate residential houses for section 54F. In this case the assessee owned three independent residential units which had three separate kitchens in a building at Karol Bagh. He signed development agreement with a developer to construct floors at a plot in pitham pura out of which he sold one floor and claimed deduction u/s 54F against such proceeds. He claimed that the existing three floors in karol bagh building are one house. The authorities held that these are three residential units thus denying benefit of section 54F deduction.
The Tribunal held that the provisions of section is very clear that the assessee can have not more than one house, it means that the assessee can have one house plus another independent residential house to claim the deduction. Further the residential house means it should contain room, hall and kitchen. Since in the given case, the assessee was earning rental income from three independent residential units which had three separate kitchens, from the building at Karol Bagh, it means that it already held three residential units. Thus the eligibility to claim the benefit u/s 54F fails. The construction of new building at Pitampura is beyond the eligible units wherein the assessee at the time of sale of second floor to the developer, had more than one property, therefore the assessee is held not eligible to claim deduction u/s 54F at the entry level itself.