Tax exemption for housing loan

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Prasad (Querist)
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07 January 2013 Respected Sir,

I am bit confuse with regard to home loan exemption for the principle and interest.

Sir,

I would like to know,

Can I claim exemption for the interest and principle paid for the home loan and HRA.

I have home loan for property in Mumbai and I am staying in chennai in rented house.

I read that both can be claim together as the property is not in the same city.

But the income tax office say, I cannot claim both HRA and interest and principle together as the house is self occupied though it is in different city. Please help me understand, so that i could reply to the income tax dept.

regards
Prasad

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 January 2013 You may refer the Section 23(2)- which allows you to keep self Occupied Property annual value of which is treated as NIL.
However, from such annual value you can claim deduction U/s 24(b).
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For HRA Section 10(13A) along with Rule 2A
can be referred. Explanation to rule 2A prescribes that exemption is denied to only those employees who live in their own house or do not pay any rent.
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Having a own house is different from living in own house.
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It is the employment which enforces an owner to take shelter as a tenant and by enacting Section 23(2), Section 10(13A) and Section 24(b) law has taken due care of the assessees who is in an employment.
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You just explain them, they will not be able to show you that a person owning a house can not claim both the benefits.
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