Income from house property

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Avinash Amble (Querist)

28 May 2012 I have one query on Income From House Property.

A person is having one house in Chennai and the same is given on Rent. He has taken Housing Loan to purchase this property. He is working in Mumbai. He is leaving in rented house in Mumbai. He has purchased one house in Mumbai with Housing Loan. This house in Mumbai is not given on rent (vecant through out the year).

How to calculate income from House property purchased in Mumbai? Can he claim entire interest on loan as deduction?

Regards,

Avinash Amble

aamble@thermaxindia.com

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)

28 May 2012 Based of your facts that house remains vacant through out the year since the property cannot be actually occupied by reason of the fact that owing to his employment in other place(as is far away from your office), it can be a UNOCCUPIED PROPERTY in terms of section 23(2) of Income tax act.

You can claim NIL GAV, only interest on housing loan allowed.

Avinash Amble

Avinash Amble (Querist)

28 May 2012 Thanks Mr. Dileep,

But I have further query.

The person does not want to use the new house purchased in Mumbai for self occupation. He wants to live in rented house only. He may or may not give the new house on rent. New house is also near to the rented house and office.

In this situation how to compute the income from HP for new house in Mumbai. In this case is it possible to claim deduction for Municiple taxes and entire interest on loan which is more than Rs. 1,50,000/-. Since he owns two houses one at Chennai and another at Mumbai, is it compulsory for him to treat one house as self occupied.

Avinash Amble

Avinash Amble (Querist)

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)

28 May 2012 Not compulsory, but GAV should be computed( Fair value i.e the sum for which the property might reasonably be expected) as if let out in whole year.

In such case there is no ceiling limit for interest amount.

Note that vacancy allowance allowed only in case where property vacant during a part of the year this view was confirmed in the case of Liquidator of Mahamudabad Properties (P.) Ltd. v. CIT [1980] 124 ITR 31 (SC)/CIT v. Pradeepkumar M. Shah [1981] 130 ITR 118 (Ker.) (FB).

Avinash Amble

Avinash Amble (Querist)

28 May 2012 Dear Mr. Dileep

Thanks a lot for prompt and quick reply.

Regards,

Avinash

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