| Question And Answer | |
|---|---|
| Subject: | Whether deduction of interest paid on house building loan can be claimed as deduction u/s 24 of the Act ? |
| Category: | Income-Tax |
| Querist: | Aadi Lakshmi |
| Answered by: | Research Team |
| Tags: | Deduction of interest, income from house property |
| Date: | June 26, 2021 |
A piece of residential plot is in Wife’s name , who has no source of income since she is a Home maker. So wife is the owner of the plot.
House Building Loan taken by Husband, who is a salaried person, with wife’s residential plot as a collateral security and constructed house on the wife’s residential plot. Monthly House Building Loan EMI ( Principal and Interest) amount paying by the Husband out of his salary amount.
The lender Banker has granted House Building Loan in the name of Wife and Husband (jointly ).
The query is:
Can the husband claim receipt of House Rent Allowance received from the employer as exempt though he is not paying any rent since he is residing in the constructed house ? Or;
Can he claim 100 / 50% Interest and Principal on Loan taken for the construction of house, though the residential plot is not in his name , out of his salaried taxable income ?
One has to verify whether the Husband is the Owner of the House property though he is not owner of the Plot .In law the land can be owned by Wife and house property can be owned by the Husband . By an agreement , arrangement or declaration , if wife has allowed the Husband to construct the House the husband is considered as owner of the House property .
In the loan application refers the husband as the owner or Co -owner then the interest paid can be claimed as deduction to the extent of his ownership . Refer CIT v. Abdullabahi M.Moonim ( 1981 ) 132 ITR 642 ( Bom) ( HC).
On the facts it looks entire house construction cost is borne by the Husband the name of the wife in the loan application is for the formality .
The husband can claim interest as deduction .
Receipt of House rent allowance cannot be claimed as deduction unless actual payment is made and subject to other conditions as per the law .
One has to read the terms of employment . It is tax Consultant of the assessee may be able to guide properly after reading the agreement of House Building and terms of loan agreement .