HRA benefit - Interest benefit

[Rahul Bagaria]

I own 2 houses in Calcutta and stays in a rented appartment in Gurgaon. My questions: - Can I claim HRA benefit for Gurgaon - Show 1st property as self occupied in Calcutta and claim Rs 1,50,000 interest benefit. - Show the 2nd property as let out and calculate notional rent and then can claim further loss (assuming my rental income is much lower than the Interest EMI , I pay) I think I am right on all my thoughts.Please opine.

[Ravi Chopra]

I think you can plan your taxes according to the manner explained in the query. I do not see anything adverse in it.

The view of Mr. Ravi Chopra are appealing since the provisions of section 23(2)(b)of the income tax pertaining to self occupied property allows you to take the benefit of self occupied property in case you are residing at any other place due to employment in a property which is not belonging to you. The provision can be read as: "(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." Therefore you may go ahead. However, on the issue of notional rent, i would advise that you must be careful for ascertaining correct FMV or Municipal value etc.

AI Summary

House Rent Allowance entitlement: designate one owned home as self occupied and treat another as let out for tax purposes.
A taxpayer residing in rented accommodation due to employment may designate one owned dwelling as self occupied and claim interest benefit for that property. Another owned property may be treated as let out, with notional or actual rent computed and interest potentially creating a deductible loss, subject to correct fair market or municipal value determination for notional rent.