New Delhi, Oct. 24 -- Homebuyers who reinvest capital gains in two adjoining flats may be eligible for a tax exemption if the properties are physically connected and function as a single residential home, according to a recent ruling by the Mumbai bench of the Income Tax Appellate Tribunal (ITAT).

According to Research Lawsathi, the tribunal held that the tax department cannot reject an exemption claim under Section 54F of the Income-tax Act merely because the two flats have separate registration deeds, individual flat numbers or separate parking spaces. The absence of formal municipal or RERA approval to amalgamate the units is also not, by itself, sufficient grounds to deny the benefit.

However, taxpayers cannot assume that buying two...