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Thanks :)

Commissioner Of Income-Tax vs P.R. Thakkar on 26 March, 1987
Equivalent citations: 1988 170 ITR 224 Bom


Here is the full Case Law
http://indiankanoon.org/doc/461568/

Dear Sir,

On basis of ur reply, i read the section again coupled with case laws on the net.
You are right.

Bombay High court in the case of P.R.Thakkar :-
held that  a reading of sections 20 to 26 of the said Act made it clear that, where a house property was owned by co-owners who had definite and ascertainable shares, the gross income from such property was first to be ascertained on the basis of the provisions of section 23 of the said Act. From such gross income, the deductions under section 24 had to be made. This gave the net income from the total property as available to the co-owners. The net income was then to be allocated to each of the co-owners in the proportion of their respective shares. After this was done, each of the co-owners was entitled to the deductions under section 24. Each was entitled to the deduction of interest on the amount of money that he might have borrowed for the construction or acquisition of his share in the house property.
So, Co-owners are entitled to a deduction of up to a maximum of Rs. 1.5 lakh each on account of interest paid on the home loan. However, if the house is given on rent, then there is no limit on the amount of deduction on account of interest paid on the borrowed capital.

Dear Sir,

In Case of Co-Ownership of property (section 26 of the income tax act), income under the head HOUSE PROPERTY shall be calculated assuming there is a single owner.
Hence all relevant deductions under the act i.e. Standard 30% deduction as well as interest deduction ( maximum Rs.150000 in case of self occupied) will be taken and income calculated thereupon.

The resulting figure that arrives shall THEN be apportioned among the co-owners in their respective share(which is definite & ascertainable) of house property & included in his total income.
Hence the Issue of claiming Rs. 1.5 laks as deduction SEPARATELY to both husband & wife is immaterial.
THE AO is right that both of you can together claim 150000 deduction & not separately in your individual returns.


This has been explicitly provided in the Act by virtue of section 26