Case Law Details
Brief of the Case
ITAT Delhi held in the case of Mrs. Samiksha Mahajan & Mrs. Anita Rani vs. ACIT that as per provisions u/s 24, it is crystal clear 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. 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 Rs.1,50,000/- is allowable on account of interest paid on the loan raised to acquired the property. In the present case, the assessee raised loan of Rs.22.50 lacs 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 Rs.1,42,123/- was deductible u/s 24.
Facts of the Case
The assessee e-filed the return of income on 30.03.2011 declaring an income of Rs.7,03,420/-. Later on, the case was selected for scrutiny. The AO observed that the assessee had declared income at Rs.10, 22,171/- under the head income from house property. He also observed that the assessee was the co-owner of the farm land with Smt. Anita Rani Mahajan, both having the equal share and entered into an agreement with M/s Nimitya Properties Ltd. who will construct the farm house on the land, bearing all the expenditure incurred on the development and construction of 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% 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% of the rent, the remaining 30% will go to the owners of the land. Thus, the assessee alongwith Smt. Anita Rani Mahajan was entitled to receive 30% of the rent. The individual share of the assessee being 15% of the total rent which came to Rs.11,79,375/- whereas the assessee had declared rent of Rs.10,22,171/-. According to the AO, the assessee had declared rent short by Rs.1,10,043/- which was added to the income of the assessee.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
