Nov 10, 2012

Double deduction on interest on housing loan

Assessee purchased a house property in the year 2003, which he sold in the financial year 2006-07. While computing capital gains from sale of such house, he claimed deduction under section 48 in respect of the interest on housing loan taken for purchase of such house. The Assessing Officer disallowed the deduction for such interest under Section 48 on the ground that assessee had already claimed deduction of such interest under section 24(b) and, hence, the same could not be deducted under section 48 for computation of capital gains as otherwise it would tantamount to double deductions.

On appeal, the Tribunal held in favour of assessee as under:

1) A perusal of sections 24(b) and 48 makes it unambiguous that none of them excludes operation of the other;

2) In other words, a deduction under section 24(b) is claimed only when concerned assessee declares income from 'house property', whereas the cost of the same asset is taken into consideration when the property is sold and capital gains are computed under section 48;

3) There can't be any doubt that the interest in question is indeed an expenditure in acquiring the asset.

Therefore, it held that since both provisions are altogether different, the claim of assessee to include the interest amount at the time of computing capital gains under section 48 couldn't be denied – ACIT v. C. RAMABRAHMAM [2012] 27 104 (Chennai - Trib.)