Interest on housing loan deduction US 24(b) & US 48

IT : Interest on housing loan already claimed as deduction under section 24(b) in computing income from house property can again be deducted by the assessee under section 48 as cost of acquisition while computing capital gains from sale of the house

FACTS

• Assessee sold his house during financial year 2006-07.

• He had purchased the house in 2003.

• In computing capital gains from sale of house, he claimed deduction under section 48(cost of acquisition) in respect of the interest on housing loan taken for purchase of house.

• AO disallowed deduction under section 48 on the grounds 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.

HELD

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

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

• There is not the slightest doubt that the interest in question is indeed an expenditure in acquiring the asset.

• Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 of the "Act".[2012] 27 taxmann.com 104 (Chennai - Trib.)- Source Taxmann.