Very complex query on income tax - pls help

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 June 2013 Hi,

I aquired a commercial property by taking a loan against property (LAP) on my residential house. I want to claim income tax rebate on the principle and interest of this LAP. Is this allowed and if yes then to what extent?
Note: I have rented the commercial property.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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17 June 2013 Sec.24(b) for interest on housing loan & Sec.80C housing loan principal both these are allowed the loan taken for purchase, acquire or construct the housing loan.

So loan taken against the property pledged is not eligible for deduction as housing loan in sec.24b as well as 80C

Querist : Anonymous

Querist : Anonymous (Querist)

18 June 2013 I told you it is complex and not so easy!!

No where in sec24, is said that rebate is for housing loan. Rebate is for house property which could be any type of property.

Thus only if it can be proved that house property is acquired using borrowed funds then rebate should be there. Please suggest.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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18 June 2013 Dont refer sec.24 alone, if the property comes under sec.22, then only the question will arise sec.24 applicable or not

where as sec.22 extract below

The annual value of property consisting of any buildings71 or lands appurtenant71 thereto of which the assessee is the owner71, other than such portions of such property as he may occupy71 for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property".

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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18 June 2013 Sec.24 Extract

Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.