New Delhi, Aug. 29 -- Can you claim tax exemption under Section 54 if the investment involves two flats? A recent Mumbai Income Tax Appellate Tribunal (ITAT) ruling has provided clarity on this question.

The Tribunal held that two adjacent flats legally and physically amalgamated into a single residential unit could be treated as one residential house for claiming capital gains exemptions, as reported by TaxGuru.

The taxpayer sold a residential property at Malabar Hill, Mumbai, for Rs.43 crore. After considering the cost of acquisition, he computed long-term capital gains of Rs.26.59 crore and claimed the entire amount as exempt under Section 54 for Assessment Year 2021-22.

The investment involved Flat Nos. 3101 and 3102 at Lower Parel...