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2016 (5) TMI 103 - ITAT DELHI

2016 (5) TMI 103 - ITAT DELHI - [2016] 47 ITR (Trib) 59 - Interest 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 .....

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y", 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 impug .....

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ssessing 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 - I. T. A. No. 3117/Del/2015, I. T. A. No. 3118/Del/2015 - Dated:- 5-2-2016 - N. K. Saini (Accountant Member) And A. T. Varkey (Judicial Member) For the Petitioner : Salil Kapoor, Sambhav Rastogi For the Respondent : K. K. Jaiswal ORDER N. K. Saini (Accountant Member) 1. These appeals by the assessees are directed against the separate orders .....

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ase in holding that the provisions of section 24(b) are not applicable if the loan funds are used in purchasing the land and such funds are not used for construction of the property on that land. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law as well as the facts of the case in rejecting the claim of the interest on house loan of ₹ 1,42,347 under section 24 of the Income- tax Act, 1961, on the above presumption. 3. That the learned Commissioner of Income-tax (App .....

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grounds, it is clear that the grievance of the assessee, vide ground Nos. 1 and 2 relates to the rejection of the claim of the assessee on account of interest on housing loan under section 24 of the Income- tax Act, 1961 (hereinafter referred to as "the Act"). 5. The facts of the case in brief are that the assessee e-filed the return of income on March 30, 2011, declaring an income of ₹ 7,03,420. Later on, the case was selected for scrutiny. The Assessing Officer observed that t .....

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the said farm house and that on the completion of the project, the developer, i.e., M/s. Nimitya Properties Ltd. will be entitled to 50 per cent. share out of the total consideration to be received after selling the said farm house and in case the property is rented out, the developer will receive 70 per cent. of the rent, the remaining 30 per cent. will go to the owners of the land. Thus, the assessee along with Smt. Anita Rani Mahajan was entitled to receive 30 per cent. of the rent. The indi .....

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any amount on construction of the farm house, therefore, he was of the view that the deduction could not be allowed. The Assessing Officer also observed that the assessee claimed deduction of ₹ 1,00,000 under section 80C of the Act, which was restricted to the sum of ₹ 51,000 and the remaining amount of ₹ 49,000 was added to the income of the assessee. 7. Being aggrieved the assessee carried the matter to the learned Commissioner of Income-tax (Appeals) and challenged the addi .....

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he Assessing Officer failed to consider the documentary evidence and the case law provided by the assessee during the course of assessment proceedings and that no justifiable reason had been cited for disallowing the claim of interest on the borrowed capital. 8. The learned Commissioner of Income-tax (Appeals), after considering the submissions of the assessee, observed that the assessee had purchased the land by taking the loan from Indian Overseas Bank, however, the property was constructed by .....

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Devendra M. Surti v. State of Gujarat, AIR 1969 SC 63. The learned Commissioner of Income-tax (Appeals) further observed that the assessee had not spent any amount on the construction of the building, therefore, she was not entitled for deduction under section 24(b) of the Act. He, accordingly, upheld the disallowance made by the Assessing Officer. As regards to the disallowance of ₹ 49,000 under section 80C of the Act, the learned Commissioner of Income-tax (Appeals) held that the assess .....

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roperty was assessed under the head "Income from house property" and even the addition was made by the Assessing Officer in the income under the head "Income from house property". It was further stated that the learned Commissioner of Income-tax (Appeals) cited the wrong decision, facts of which were not applicable to the facts of the assessee's case because in the said case the loan was taken for eviction and the money was utilised for paying the tenant for handing over .....

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ve considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee raised home loan of ₹ 22,50,000 from Indian Overseas Bank against the property No. 3, Jacranda, Westend Greens, Rajokari, New Delhi, and entered into an agreement with M/s. Nimitya Properties Ltd. with an arrangement that the said company will construct the farm house on the land by incurring all the expenditure on .....

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ion was done by M/s. Nimitya Properties Ltd. However, the assessee was the co-owner in the constructed property along with Smt. Anita Rani Mahajan having 50 per cent. share and remaining 50 per cent. share was of the developer company, M/s. Nimitya Properties Ltd. The income generated from the said property was shared by M/s. Nimitya Properties Ltd. and the assessee along with Smt. Anita Rani Mahajan. In the instant case, it is an admitted fact that the assessee acquired the property by raising .....

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such capital : Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thou sand rupees : Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999, and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this cl .....

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ng previous years : Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation.-For the purposes of this proviso, the express .....

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#8377; 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 constructe .....

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est 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. 13. As regards to the issue relating to the deduction under section 80C of the Act is concerned, it is noticed that the assessee claimed the deduction of ₹ 49,000 with regard to the repayment of home loan but the Assessing Officer did not allow the same on the ground that the ass .....

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ken for acquiring the property whose income was assessed under the head "Income from house property". To resolve the present controversy, it is relevant to discuss the provision contained under section 80C(1), 80C(2)(xviii) and 80C(7)(d) of the Act applicable for the relevant assessment year under consideration which read as under : "80C.(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with an .....

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39;Income from house property' (or which would, if it had not been used for the assessee's own residence, have been chargeable to tax under that head), where such payments are made towards or by way of- (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis ; or (b) any instalment or part payment of the amount due .....

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ong-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub- section (1) of section 36, or (6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or (7) the assessee's employer where such employer is an authority or a board or a corporation or any other bod .....

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are and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member ; or (B) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other .....

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rrowed for purchase or construction of a residential house referred to in clause (xv), of sub-section (2) of section 88 shall be eligible for deduction under the corresponding provisions of this section and the deduction shall be allowed in accordance with the provisions of this section. (8) In this section,- (i) 'Administrator' means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Under taking and Repeal) Act, 2002 (58 of 2002) ; (ii) .....

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hereon) in the event of such person dying before the said stipulated date ; (b) a policy of insurance effected by an individual or a member of a Hindu undivided family for the benefit of a minor with the object of enabling the minor, after he has attained majority to secure insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf ; (iv) 'Life Insurance Corporation' means the Life Insurance Corporation o .....

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