TMI Blog1981 (4) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... rtgaging the property under construction and the construction of the property was completed. The shares of all the six co-owners of the property were known and certain. The assessee claimed deduction of the interest paid by him on the loan raised by him personally for contributing his share of the cost of construction contributed by him originally before it was pledged to the said bank. This deduction was claimed by him under cl. (vi) of s. 24(1) of the I.T. Act, 1961 (hereinafter referred to as " the said Act "), from out of his share of the income from the said property, under the head " Income from house property ". The ITO made an assessment against all the six co-owners treating them as an association of persons in respect of the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to be given in addition to the deduction of the interest amount paid on the loan taken collectively by the six co-owners for the completion of the remaining construction of the said property. The revenue having applied for stating the case under s. 256(1) of the said Act, the following question has been referred to this court by the Tribunal: " Whether, on the facts and in the circumstances of the case, the assessee was entitled to the deduction of the interest paid by him on the loan raised by him individually for contributing his share of the price and cost of construction of the property in the computation of his income under the head 'Income from house property'?" On the admitted facts themselves we should have thought that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of any interest payable on capital when the property has been acquired, constructed, repaired, renewed or re-constructed with borrowed capital. We are not concerned with s. 25 of the said Act which lays down the amounts which are not permissible to be deducted. Then comes s. 26 which is important from our point of view and which is as follows: " 26. Where property consisting of building or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons, but the share of each such persons in the income from the property as computed in accordance with sections 22 to 25 shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and 23 of the said Act. From that income again, each of these owners is entitled to deductions under s. 24. He is further individually entitled to such deductions of interest on the amount of the money which he might have borrowed for the construction or acquisition of his share in the property as in the present case. What the ITO, however, had done was to interpret s. 26 as a provision for a further allowance of deduction under s. 24 in the case of individual borrowings for the purpose of acquisition of individual shares. That was in fact to undo the provisions of s. 26 and to bring to tax the total income from the house property although the section in terms states that where the shares are definite and ascertainable the income of such ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
