Loss on Housing Property

Tax queries 1401 views 5 replies

SANKARAN.G.

Asst.Manager

95 Points Joined October 2009

My friend working as DDO in a Central Government Research Organisation, while in general discussion, told that he refused a employee's plea for Rs.1. 50 lakhs loss on housing for the self occupied property . she had submitted the interest certificate from the bank for Rs.4.00 lakhs and odd as the property is jointly owned with her spouse who is working in an IT Company. His contentions is only Rs.1.50 lakhs is eligible under self occupied (Both combined) and therefore her spouse has to give a certificate that he is claiming Rs.75,000/- or not claiming at all to get the benefit of Rs.1.50 lakhs at one end. How this is corrrect?

My question is why they can't claim separately Rs.1.50 lakhs each maximum eligible as they have paid more than four lakhs as interest alone for the property. and

Whether the question of recovering the EMI part from the bank to be made from both to get the benefit?

Replies (5)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

refer to the link , its allowed for each joint holder seperately for single property

/experts/sec-24-income-from-house-property-joint-applicants-9326.asp

C.Balaji

Learner

1867 Points Joined October 2008

House Owned by both Husband and Wife.... Loan taken by both??? pls clarify.

CA PARAS BAFNA

Practising CA

33428 Points Joined April 2009

".........His contentions is only Rs.1.50 lakhs is eligible under self occupied (Both combined) and therefore her spouse has to give a certificate that he is claiming Rs. 75,000/- or not claiming at all to get the benefit of Rs.1.50 lakhs at one end. How this is corrrect"

Ans > The stand taken as "Rs.1.50 lakhs is eligible under self occupied (Both combined)"

is the root of problem which lies in the Second Proviso of Section 24.

So we have to unearth the root from the Second Proviso only.

"It says that for self occupied property maximum interest allowable to an assessee is Rs. 1.50 lac." Section 23(2) has been directly referred in the First Proviso of Section 24.

In case of co-owners Section 26 specifies that share of each such person shall be computed in accordance with Section 22 to 25. For removing any doubt Explanation has been given to clarify that U/s 23(2) each co-owner is entitled individually to claim the relief of SOP (Self Occupied Property).

So in Section 23(2) by virtue of Section 26 , there may be two or more co-owners, and each one is entitled to claim SOP benefit in respect to the co-owned property.

Now reverting back to Section 24 which caps the deduction at maximum of Rs. 1.50 lac. ( Root of the dispute) . Here, the mistaken view is being taken by treating the property as a single UNIT. Whereas in fact by virtue of Section 26 there are 2 or more SOPs or taxable units, as property held by each co-borrower, and as such constiute a separate property for each.

On the above logic it can be established that each co-owner who is a co-borrower also, is entitled to claim the deduction in respect to their part in property as each one of them is considered as a separate assessees by virtue of section 26.