Under the Code, the following expenditure will not be allowed as a deduction in the computation of total income :-
(a) any expenditure attributable to income which does not form part of the total income under this Code and determined in accordance with the method as may be prescribed;
(b) any expenditure incurred for any purpose which is an offence or which is prohibited by law;
(c) any provision made by a person for any liability if the liability remains unascertained by the end of the financial year; and
(d) any expenditure where the source of funds for such expenditure is unexplained;
(e) any expenditure incurred by a non-resident in respect of,-
(i) royalty;
(ii) fees for technical services; or
(iii) any income which is liable to tax at the special rate of income-tax specified in Part II of the First Schedule.
The proposal to withdraw deduction of interest on self occupied property seems to lack a sense of fair approach.
It is to be understood that a house is a fundamental requirement and therfore withdrawal of the existing provision wrt interest deduction will be very unfair if done without consideration of facts.
The government should think of withdrawing the exemption in case of such investments in a self occupied property exceeding a particular value, say Rs 75.00 Lakhs which would be well justified as at any higher level of investment, if there is an affordabilty to invest, there should logically be an affordability to forgo interest deduction.