Impact of income tax

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shailja golash (Querist)

16 February 2012 MR.A PURCHASED A PROPERTY FROM MR.B AT THE TIME OF PURCHASE PAPERS OF PROPERTY WAS NOT CLEAR SO MR.A CANNOT AVAIL THE BANK LOAN FACILITY AND HE PAID 80% OF PROPERTY VALUE BY TAKING A PERMANENT WITHDRAWAL FROM ITS PROVIDENT FUND ACCOUNT IN 2011. NOW THE PAPERS OF PROPERTY ARE CLEAR AND BANK IS READY TO GIVE LOAN AND AFTER TAKING LOAN MR.A WILL GET INCOME TAX BENEFIT AND BANK IS READY TO DISBURSE THAT 80% TO MR.A AS HE HAS ALREADY PAID THAT AMOUNT OUT OF HIS PF TO MR.B . IS THERE ANY INCOME TAX PROBLEM IF TAKES THAT 80% AMOUNT FROM BANK . PL.ADVISE

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

19 February 2012 THE PROPERTY DOCUMENTS ARE CLEAR MEANS THE REGISTRATION IS COMPLETED AND NOW , NO MORE PAYMENT IS REQUIRED TO THE VENDOR OF THE PROPERTY.
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IN SUCH A SITUATION, IT DOES NOT SEEM LOGICAL TO SAY THAT THE BANK DISBURSES THIS AMOUNT AS HOME LOAN/ HOUSING LOAN. IT IS POSSIBLE THAT THE LOAN MAY BE TERMED BY THE BANK AS A MORTGAGE LOAN.
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HAD THE ASSESSEE TOOK LOAN AGAINST THE PF , AND HAD THIS AMOUNT SO RECEIVED FROM BANK IS BEING UTILISED IN REPAYMENT OF LOAN CHANCES OF AVAILING DEDUCTION U/S 24 WOULD HAVE REMAINED ALIVE.
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SO, IF THE LOAN IS A MORTGAGE LOAN, ASSESSEE WILL NOT GET ANY BENEFIT AS AVAILABLE U/S 80C AND 24.
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