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2016 (5) TMI 103 - AT - Income TaxInterest on housing loan under section 24 rejected - Held that:- Deduction is allowable on account of interest paid on the borrowed capital within three years from the end of the financial year in which capital was borrowed and in the relevant assessment year, the deduction allowable was of ₹ 1,50,000 which has been enhanced to ₹ 2,00,000 by the Finance Act (No. 2), 2014, with effect from April 1, 2015. As per the Explanation appended to the proviso of the aforesaid section, it is also clear that the property either be acquired or constructed with the borrowed capital. It is nowhere mentioned that the property must be acquired as well as constructed with the borrowed capital. The use of the word "or" in between acquired and constructed makes it clear that the property can either be acquired or constructed with the borrowed capital and if the income is earned which is assessed under the head "Income from house property", the deduction to the maximum extent of ₹ 1,50,000 is allowable on account of interest paid on the loan raised to acquire the property. In the present case, the assessee raised loan of ₹ 22.50 lakhs from the Indian Overseas Bank and acquired the property, income of which was assessed under the head "Income from house property". Therefore, the interest paid amounting to ₹ 1,42,123 was deductible under section 24(b) of the Act. In that view of the matter we set aside the impugned order and direct the Assessing Officer to allow the claim of the assessee. Deduction under section 80C - Held that:- In the present case, the assessee borrowed the amount for acquiring the property whose income was assessed under the head "Income from house property" and made the repayment of the said loan. Therefore, the said repayment was eligible for claiming the deduction under section 80C of the Act. In that view of the matter, we set aside the impugned order and direct the Assessing Officer to include the amount claimed by the assessee while working out the deduction under section 80C of the Act. - Decided in favour of assessee
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