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2016 (5) TMI 103

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.... the property on that land. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law as well as the facts of the case in rejecting the claim of the interest on house loan of Rs. 1,42,347 under section 24 of the Income- tax Act, 1961, on the above presumption. 3. That the learned Commissioner of Income-tax (Appeals) has erred in law as well as on the facts of the case disallowing the claim of Rs. 49,000 under section 80C of the Income-tax Act, towards repayment of housing loan on the basis of the presumption that the loan funds are used in purchasing the land and such funds are not used for construction of the property on that land. 4. The appellant craves leave to add to, alter, vary, modify or otherwise amend the grounds of appeal before the appeal is finally disposed of." 4. From the above grounds, it is clear that the grievance of the assessee, vide ground Nos. 1 and 2 relates to the rejection of the claim of the assessee on account of interest on housing loan under section 24 of the Income- tax Act, 1961 (hereinafter referred to as "the Act"). 5. The facts of the case in brief are that the assessee e-filed the return of income on March 30, 2011, declari....

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....nt on borrowed fund for the purpose of the acquisition of the property from which the rental income is derived, is an allowable expense. It was further stated that the Assessing Officer failed to consider the documentary evidence and the case law provided by the assessee during the course of assessment proceedings and that no justifiable reason had been cited for disallowing the claim of interest on the borrowed capital. 8. The learned Commissioner of Income-tax (Appeals), after considering the submissions of the assessee, observed that the assessee had purchased the land by taking the loan from Indian Overseas Bank, however, the property was constructed by M/s. Nimitya Properties Ltd. and not by the assessee. He further observed that section 24(b) of the Act provides for deduction in respect of acquisition of property consisting of any buildings or land appurtenant thereto. Thus, the land appurtenant thereto is to be understood in the context of the building and not independently. The reliance was placed on the decision of the hon'ble Supreme Court in the case of G. Claridge and Co. Ltd. v. Collector of Central Excise [1991] 2 SCC 229 and Dr. Devendra M. Surti v. State of Guj....

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....curring all the expenditure on the development and construction of the said farm house on completion of the project. The said developer company was entitled for 50 per cent. shares out of the total consideration to be received after selling the said farm house and in case the said property was to be rented out, the developer company would receive 70 per cent. of the rent and the remaining 30 per cent. will go to the owners of the land. The assessee along with Smt. Anita Rani Mahajan is the owner of the land on which construction was done by M/s. Nimitya Properties Ltd. However, the assessee was the co-owner in the constructed property along with Smt. Anita Rani Mahajan having 50 per cent. share and remaining 50 per cent. share was of the developer company, M/s. Nimitya Properties Ltd. The income generated from the said property was shared by M/s. Nimitya Properties Ltd. and the assessee along with Smt. Anita Rani Mahajan. In the instant case, it is an admitted fact that the assessee acquired the property by raising the loan. To resolve the present controversy, it is relevant to discuss, the provision contained in section 24 of the Act which read as under : "24. Income chargeable ....

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....il 1, 2015. As per the Explanation appended to the proviso of the aforesaid section, it is also clear that the property either be acquired or constructed with the borrowed capital. It is nowhere mentioned that the property must be acquired as well as constructed with the borrowed capital. The use of the word "or" in between acquired and constructed makes it clear that the property can either be acquired or constructed with the borrowed capital and if the income is earned which is assessed under the head "Income from house property", the deduction to the maximum extent of Rs. 1,50,000 is allowable on account of interest paid on the loan raised to acquire the property. In the present case, the assessee raised loan of Rs. 22.50 lakhs from the Indian Overseas Bank and acquired the property, income of which was assessed under the head "Income from house property". Therefore, the interest paid amounting to Rs. 1,42,123 was deductible under section 24(b) of the Act. In that view of the matter we set aside the impugned order and direct the Assessing Officer to allow the claim of the assessee. 13. As regards to the issue relating to the deduction under section 80C of the Act is concerned, ....

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....entral Government or any State Government, or (2) any bank, including a co-operative bank, or (3) the Life Insurance Corporation, or (4) the National Housing Bank, or (5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub- section (1) of section 36, or (6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or (7) the assessee's employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or (8) the assessee's employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society ; or (d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the....