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There is neither any precondition nor an eligibility criteria which mandates that the assessee should have taken possession of the property for claiming deduction towards Housing Loan Interest U/s 24(b).

Author

CA. Shashank A. Mehta

Parties:Mr. Abeezar Faizullabhoy vs. CIT

Decision of: Hon’ble ITAT, Mumbai

Date of Order:September 01, 2021

ITA No.: 4831/Mum/2019

Issue: Interest on housing loan u/s. 24(b) – in absence of possession of property.

FACTS OF THE CASE:

The Assessee had entered into a purchase agreement in the year 2009-10 to acquire a property and had availed housing loan for the same. Interest on housing loan was being claimed by him to the extent of Rs. 2,00,000/- u/s. 24(b). For AY 2015-16; the AO disallowed the claim for interest expenditure on the ground that Assessee was not handed over the possession of the said property.

On further appeal, even CIT(A) upheld the findings of the AO. CIT(A) was of the view that if interest is allowed (in absence of possession of property) then it would mean- claiming of interest expenditure for several years even when there would not be any corresponding income from said house property.Accordingly, deduction for interest u/s. 24(b) was disallowed.

QUESTION BEFORE THE HON’BLE TRIBUNAL:

Whether, interest on housing loan u/s. 24(b) can be denied in absence of handing over of the possession of the property?

FINDINGS AND DECISION OF THE HON’BLE TRIBUNAL:

Hon’ble ITAT observed that Assessee was in possession of valid certificate of interest payment on housing loan.

Hon’ble ITAT held that section 24(b) contemplates that an assessee shall be entitled to claim deduction of any interest payable on the capital borrowed by him for acquiring, constructing, repairing, renewing or reconstructing a property.

In section 24(b) there is neither any precondition nor an eligibility criteria which mandates that the assessee should have taken possession of the property.

The ground for disallowance as stated by CIT(A) was not tenable. The determination of the ‘Annual Lettable Value’ is dependent on ‘ownership’ of the property and for that matter, the ‘possession’ of the property is not relevant.

On literal interpretation of Section 24(b) it can be inferred that there was no bar on an assessee to claim deduction of interest payable on housing loan, though, the possession of the same might not have been vested with him. Accordingly, deduction u/s. 24(b) for interest paid was allowed to the Assessee.

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Summarized by:

CA. Shashank A. Mehta

Email: shashankmehta1695@gmail.com

Cont.: 7208046221

LinkedIn ID: https://www.linkedin.com/in/casamehta

Blog Address: https://casamehta.blogspot.com

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