Interest on housing Loan

This query is : Resolved

Ashok Kumar Verma (Querist)
Follow

22 April 2010 We seek the opinion in below points for the FY 2010-2011

One of my staff has purchased a house in Mumbai in 2005 where his parents and other family members are residing. He is working in Bharuch Gujarat in rented house and claiming interest as well as HRA benefits u/s 23 (2).

Now he has purchase another house in place of working i.e, in Bharuch and seeks exemption for interest on loan for two house one in Mumbai and another at place of working where he was claiming HRA benefits.

Can we allow him.

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
Follow

22 April 2010 yes, you can allow only one exmption i.e. if he owned a house then he will not be entitled to HRA

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

22 April 2010 For the same city both house rent and interest on housing loan cannot be claimed.

If self owned property is in different city and the rented premises is the place of work then both HRA & interest deduction u/s 24 can be allowed.

Upgrade to CAclubindia Pro. Subscribe Now!

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

23 April 2010 Section 23(2) states

Where the property consists of a house or part of a house which—

(a) is in the occupation of the owner for the purposes of his own residence; or

(b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him,

the annual value of such house or part of the house shall be taken to be nil.

And section 24(b) states
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :

Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 4[within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.

Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:]

So if you read both the sections together interest on two SOP houses can be claimed.