housing loan exemption

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s s panda (Querist)
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04 June 2011 Please advise based on the following facts whether the interest paid is eligible for exempton/housing loan benefits under section 24 of IT Act(or any other):

1) The house is in the name of my father.
2) I have taken a house repair/renovation loan in May for which Rs.1 lakh will be paid as interest during 2011-12.
3)The house is mortgaged to the bank and my fater is the coapplicant.
4) I am the main applicant.
5) After one year, my EMI will start.

Now the question is whether Rs.1 lakh is eligible for exemption or not.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 June 2011 Income from House Property is charged to tax according to the provisions of Section 22 which envisages condition of ownership. Further, deemed owners are also made liable to tax under IFHP and the said provisions are contained in Section Section 27. In the situation as you have mentioned above, the owner of the house property is your father.

Now we come to the point of allowability of interest which is governed by Section 24. Section 24 envisages that for claiming the interest deduction under this section , there is a pre-condition and the pre-condition is that this deduction will be allowed only from Income from House Property. It may be zero in case of self occupied property but it should not be non-existent.
As such I arrive on the conclusion that your father is entitled to claim the interest and suggest that the EMI should be paid through his account only.