CIT vs D Ananda Basappa 309 ITR 329 (Kar.), where multiple flats were purchased in the same complex and were used as one unit. In this case, the tax exemption was allowed. A special leave petition filed by the income tax department against this decision was also rejected by the Supreme Court.

Hence, it can be reasonably inferred that even after the amendment of Section 54 and 54F, providing for exemption from long-term capital gains tax, only if the investment is made in one residential house property, one can still invest in more than one house and claim the tax exemption, provided the taxpayer can prove that all such flats are used as a single residential unit by the family. In the abovementioned case, two residential units were purchased, which were separated by a strong wall and were purchased from two different vendors under two separate sale deeds. The exemption was still granted to the tax payer, because both the flats were capable of being used as a single residential unit.

So if its a joint flat no matter under one agreement or two then the exemption shall be available then also I would still advise do a single agreement mention clearly that it is a single unit under two numbers.

Also she can hold one residential home apart from asset sold and newly purchased.

So she will get the exemption under 54F

Why the builder had sold the property in two numbers is not clear from the post? If the flat was sold in two parts then also the address is supposed to remain the same (since you said it has single entrance, therefore address is obviously same, if there is any other reason then mention that).

You can check the latest amendments, if any (please note that, "The following are some conditions which should be satisfied to claim the benefit of section 54: 1. The benefit of section 54 is available only to an individual or HUF. 2. The asset transferred should be a long-term capital asset, being a residential house Property, etc. And W.e.f assessment year 2018-19, the period of holding in case of immovable property, being land or building or both, is reduced from 36 months to 24 months, to qualify as long-term capital asset. In this case if the house property is sold after holding it for a period of less than 24 months and, hence, it is a short-term capital asset. The benefit of section 54 is not available in respect of a short-term capital asset)".

Tax Exemption creteria:

Exemption if tax for capital gains by way of transfer of residential property: W.e.f. assessment year 2015-16 exemption can be claimed only in respect of one residential house property purchased/constructed in India. Please note, if more than one house is Purchased or Constructed, then exemption under section 54 will be available in respect of one house only. Again, No exemption can be claimed in respect of house purchased outside India.

If the vender is same then both the properties should merged for one sale deed and there should be no problem in utilisation of long term capital gains as per section 54F.

There is no impact of the other house she has.

1. It appears that there were two flats sanctioned which have been bought buy one person who merged the said two flats in to one though in books and records there are existence of two flats.

2. She shall have to buy the said two flats through one sale deed only properly reciting therein the fact that two flats have been physically merged and made in to one flat.

3. If it is recorded and proved that she has bought one dwelling accommodation which is actually the combination of two flats, then she will be eligible to claim LTCG Tax exemption as per IT Act.

4. If she already has a dwelling house which has been recorded in her ITR with the I.Tax department, then she will not be allowed the said exemption.

In Gita Duggal case (in 257 CTR 208), the Delhi High Court held that the expression ‘a residential house’ should be understood in a sense that building should be a residential one and that the word ‘a’ should not be understood to indicate a singular number. The court interpreted the word ‘a residential house’ to mean any residential house,

2) tax payers were able to claim long-term capital gains tax exemption by investing in more than one house property. However, an amendment was made to the income tax laws, which replaced ‘a residential house’ with ‘one residential house’, with effect from April 1, 2015.

3) even after the amendment of Section 54 and 54F, providing for exemption from long-term capital gains tax, only if the investment is made in one residential house property, one can still invest in more than one house and claim the tax exemption, provided the taxpayer can prove that all such flats are used as a single residential unit by the family

Please note that, "The following are some conditions which should be satisfied to claim the benefit of section 54: 1. The benefit of section 54 is available only to an individual or HUF. 2. The asset transferred should be a long-term capital asset, being a residential house Property, etc. And W.e.f assessment year 2018-19, the period of holding in case of immovable property, being land or building or both, is reduced from 36 months to 24 months, to qualify as long-term capital asset. In this case if the house property is sold after holding it for a period of less than 24 months and, hence, it is a short-term capital asset. The benefit of section 54 is not available in respect of a short-term capital asset)".

Tax Exemption creteria:

Exemption if tax for capital gains by way of transfer of residential property: W.e.f. assessment year 2015-16 exemption can be claimed only in respect of one residential house property purchased/constructed in India. Please note, if more than one house is Purchased or Constructed, then exemption under section 54 will be available in respect of one house only. Again, No exemption can be claimed in respect of house purchased outside India.

If two agreements are presented then the Registrar will check 2, if two agreements are merged into one then the Registrar will check the 1 agreement only.

Coming to you original post, you had mentioned, that "The property that she has shortlisted is a resale property, the builder has sold the flats with two numbers. For Eg 903 & 904 (without an option to buyer) There are two agreements that the builder has done with the current owner, however it is only ONE flat, with a single entrance, single Kitchen, single drawing room.

Can she invest in this house to claim exemption on the capital gain ?"

- since, W.e.f. assessment year 2015-16 exemption can be claimed only in respect of one residential house property purchased/constructed in India. Please note, if more than one house is Purchased or Constructed, then exemption under section 54 will be available in respect of one house only. Again, No exemption can be claimed in respect of house purchased outside India (it is not clear from your post, where the residential flat is situated).

The question still remains why the builder had sold one flat in two different number? (If it is supposed that there were two entrances and the flat was divided into two parts then it is a possibility that two numbers were alloted to the two parts, but the exact reason is not clear from your post).

1) you and your family can regularly come to stay in flat in intervals

2) it would make the 2 flats one residential unit as the 2 flats are used as one residential unit

3) your mother has to enter into 2 separate agreements

Yes it should in her name nobody is gng to check.

Yes in case it comes to court otherwise you van prove to income tax authority it is a single unit.

She will be allowed apart from this new purchase she can hold on more residential property.

Yes one residential unit.

If same purchaser and seller property located same place yes.

She will get benifit of 54F for single unit no matter they are two flat and she hold one residential property already.

1. By record it shall have to be proved that it is a single flat for which the sale deed shall have to me made accordingly stating hat two flats have been amalgamated and made in to one single unit. No Court or I.T Officer will come to the flat to see whether there is one kitchen or two. The fact recorded in the sale deed will be considered as final.

2. She will get exemption for investing the capital gain in her dwelling house for her own staying and not for increasing or investing in property when she alraedy has a dwelling house for her staying.

3. No. when there are two separate sale deeds for selling two adjoining flats then after merging it will not automatically be considered as one unit without creating a document and mentioning it in the said document. So, the sale deed for the entire unit shall have to mention about tyhe said merger of two units in to one.

4. The Registrar will allow registration of sale deed wherein you shall have to clearly mention about merger of the said two flats in to one and there will be only one sale deed.

The law for exemption is clear about buying one residential property alone.

If both units are combined and sold as single unit then she is considered to have bought a single residential property

Decide accordingly.

The formalities for merging two flats into single residential unit has to be taken care after which a single sale deed can be executed.

For claiming tax exemption the rule is that the LTCG should be invested for purchase of single residential property.