30 March 2008
An assessee, an employee in a private concern, purchased in May, 07 a house property in his wife's name (for personal reasons, say future security). Property is let out. The wife is unemployed and has no source of income and is dependent on husband. Document of purchase is in the name of wife only. Loan is availed for the purchase and the loan a/c is in the names of both husband and wife, with wife's name as first obligant. Repayment of loan (monthly EMI) is made by husband only, with wife having no source of income.The assessee has not filed return so far and is filing return for the first time in FY 2007-08 (ie, A.Y 2008-09).
For deducting TDS u/s 192 for F.Y 2007-08, the employer is not considering housing loan repayment u/s 80C for the reason that property (document) is not standing in his name. Similarly, for the same reason, the employer is not considering housing loan interest u/s 24, though the assessee volunteered his rental income to be considered for TDS u/s 192 alongwith salary (the net income from property after interest is a loss).
Is employer's action justified? Please quote decisions / circulars / material, if any, to support assessee's claim.
The assessee cited "CIT v. AJIT KUMAR ROY [2001] 252 ITR 468 DATED 28.06.2001", which the employer ignored holding that the issue there is not TDS u/s 192. The wordings in CBDT Circular No. 8 of 2007 dt. 05.12.2007, cited to employer, are also such that it does not prohibit such a claim. The employer says that circular does not openly provide consideration of such a claim.
Though the assessee can get back the excess tax paid thro' tds as refund by filing return, he wants to avoid tds, since it has heavy impact on his take home pay now.
05 April 2008
On the facts stated by you in normal circumstances the tax benefit is available only to the person who is the owner of the property. However, if we strictly apply principles of section 64 regarding clubbing of income in that event the amount spent by husband towards EMI etc. on the property in the name of his wife then I feel that he should enjoy the benefit regarding deduction of interest on the said loan. As far as repayment of the principal amount is concerned I feel that he will not enjoy the tax benefit. He may enquire from the DDA the procedure of adding his name in the registered document.
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