23 February 2013
Income Tax Act, 1961,Section 26. PROPERTY OWNED BY CO-OWNERS.
Where property consisting of building or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not in respect of such property be assessed as an association of persons but the share of each such person in the income from the property as computed in accordance with sections 22 to 25 shall be included in his total income.
Explanation : For the purposes of this section, in applying the provisions of sub-section (2) of section 23 for computing the share of each such person as is referred to in this section, such share shall be computed as if each such person is individually entitled to the relief provided in that sub-section.
23 February 2013
INTEREST ON HOUSE LOAN- INCOME TAX ACT-1961
Interest on borrowed capital is allowable as deduction on accrual basis (even if account books are kept on cash basis) if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house property. Compare Home Loan Rates ,Apply online The following aspects concerning claim for deduction of interest are to be kept in view:
1. The interest is deductible on ‘payable’ basis i.e. on accrual basis. Hence it should be claimed on yearly basis even if no payment has been made during the year. 2. For claiming interest, it is not necessary that the lender should have a charge on the property for the principal amount or the interest amount. Means mortgage of House is not necessary. 3. In Shew Kissan Bhatter v. CIT (1973) 89 ITR 61 (SC) the Supreme Court has decided that interest payable for outstanding interest is not deductible.Interest on late deposit (interest on interest )not allowed. 4.Taxpayer cannot claim deduction for any brokerage or commission paid for arranging loan either as a one time arrangement or on periodical basis till the loan continues. 5.In terms of circular No. 28 dated 20th August 1969, if an assessee takes a fresh loan to pay back the earlier loan, the interest on the fresh loan would be deductible. 6.Interest on borrowing can be claimed as deduction only by the person who has acquired or constructed the property with borrowed fund. It is not available to the successor to the property (if the successor has not utilized borrowed funds for acquisition, etc). In other words, the relationship of borrower and lender must come into existence before it can be said that any amount or any other money is borrowed for the purpose of construction, acquisition, etc., of house property by one person from another and there must be real transaction of borrowing and lending in order to amount to any borrowing. 7.In case of Central Government employees, interest on house building advance taken under the House Building Advance Rules (Ministry of Works and Housing) would be deductible on the basis of accrual of interest which would start running from the date of drawal of advance. The interest that accrues in terms of rule 6 of the House Building Advance Rules is on the balances outstanding on the last day of each month - Circular No. 363, dated June 24, 1983. 8. Any interest chargeable under the Act, payable out of India on which tax has not been paid or deducted at source, and in respect of which there is no person in India who may be treated as an agent, is not deductible, by virtue of Section 25, in computing income chargeable under the head “Income from house property”. 9.Loan can be taken from any body,unlike section 80C where the specified institutions has been given .In section 24(b) no institution has been defined ,means interest payable even to friend /relative etc for House is also deductible under section 24(b)
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