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Deduction of interest on borrowed capital in case of co-owners

Moiz W (CA - Audit & Assurance) (66 Points)

27 September 2011

Can anybody help me with the following:

In case the house property is co-owned by 2 or more persons and the interest on borrowed capital is 2 lacs, then would the co-owners get a proportionate deduction or only one person in entitled to deduction of upto1.5 lacs.

Thank you

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16 Replies

CA RICHA BADALIA (CA,CS) (1682 Points)
Replied 27 September 2011

As per Sec 24(b) each co-owner is entitled to a deduction of Rs.150000 in case of self occupied house.

Therefore in your case it is not necessary that 1 person only will claim deduction of Rs. 150000 only. Both co-owner can claim proportionate deduction.

1 Like

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 27 September 2011

agree with richa

Moiz W (CA - Audit & Assurance) (66 Points)
Replied 27 September 2011

Thanks for reply Richa,

P.S. - Is it necessary that the interest has to be paid by both co-owners or any of the co-owners can pay the interest. for e.g. if property is co-owned by husband and wife, and the husband only is paying the interest, then will it make any difference in my earlier query?

CA RICHA BADALIA (CA,CS) (1682 Points)
Replied 27 September 2011

No, it is not necessary .Any one of them can pay the interest Both of them can claim proportionate deduction in this case also,

1 Like

Ca Balwant (Manager) (185 Points)
Replied 08 October 2011

If it is possible to ascertain their share in co-owned house property they will be entitle to take benefit for tax purpose of interest paid by them in proportion to their share .

However it is not possible to ascertain their share any one or more can take benefit of that

Akhil Sharma (Service) (141 Points)
Replied 10 October 2011

Agreed with Richa.

CA Hardik Bunha (self) (2121 Points)
Replied 10 October 2011

ABSOLUTELY WRONG ...............!

mISS rICHA bOTHRA........AND OTHERS YOU ARE ABSOLUTELY WRONG............

MY friend you have to calculate income from house property as the property holding by person......

For simple Term as follows,

INCOME FROM HOUSE PROPERTY LET OUT SELF OCCUPIED

RENT(nOTIONAL) 5,00,000 -

GROSS INCOME 5,00,000 -

DEDUCTION (2,00,000) (1,50,000)

SANDARD DEDUCTION (30%) (1,50,000) -

HENCE INCOME FROM HP 1,50,000 (1,50,000)

This1,50,000 will be distribute between co-owners.............

ACCORDING TO YOU RICHA BOTHRA ....... I WILL BUY EVERY PROPERTY IN CO-OWNERSHIP AND GET DUAL BENEFIT OF INTEREST ON LOAN AND STANDARD DEDUCTION...... IS IT PRACTICAL........? iS IT ALLOWABLE BY ACT........? HA HA HA

FRIENDS TAKE IT INTO YOUR LEARN...............................ENJOY.

CA RICHA BADALIA (CA,CS) (1682 Points)
Replied 10 October 2011

Mr. Hardik firstly you should know how to speak in a public forum.People are here to gain and share knowledge and not to speak in a manner in which you spoke.

Secondly what i wrote is absolutely correct.Both the person has got a seperate limit of150000 in case of self occupied house and can claim proportionate deduction in ratio of ownership.I guess you should correct your tax knowledge in time Mr. HArdik, this will surely help you.

1 Like

CA Mukul Mittal (CA in practice) (384 Points)
Replied 10 October 2011

Hardik ji,

pls correct ur self......the income is calculated after determining the share not before.....and the deduction is allowed to both co-owners and even if there are 10 then even to all.....

CA Hardik Bunha (self) (2121 Points)
Replied 10 October 2011

ok Richaji and Mr. Mukul

chalo man leta hu me apke sath agree hu.............

kya ap muje ye bat sakte hai ki.........

ye co-owner wali property me rent pe deta hu mera us pe TDS deduct hoga to FORM 16A ka tax credit kon claim karega......................?

agar ap ye samaj sakoge to ap ko mera calculation samaj aa jayega.............

Miss Richa and Mr. Mukul yaha pe koi aese hi hava me firing karne nahi bethe hai samje.......

nimish solanki (IPCC CLEARED) (108 Points)
Replied 10 October 2011

Hello hardik,

please correct your knowledge on what has been asked. In case of self occupied property all co-owners can claim deduction upto 1,50,000. in case if it's let out the tenant will pay rent to respective coowners after deducting tax and the coowner(s) to whom payment has been made will get credit.

Mohit Jangid (Article) (141 Points)
Replied 11 October 2011

he has done assuming aop

CA Hardik Bunha (self) (2121 Points)
Replied 11 October 2011

Miss richa and Mr. mukul and otheres if u believe that u r right..................then good go go go run fast..............

Dear friends you can find this solution from

(1) IPCC INCOME TAX MODULE PAGE NUMBER 4.70 POINT NUMBER 2.10 (iv)

(2) From mukesh patel

(3) From LAW and practise by V.N. MEHTA( here u will get some case laws for this solution)

(4) If u have direct tax update then u can check on this also.....

Miss Richa Bothra don't under estimates others............................ENJOY MY FRIENDS

Aman Aggarwal (Audit & Finance Manager) (62 Points)
Replied 14 October 2011

Actually, the correct answer to the query should be that in case of self occupied property, BOTH the co-owners can claim a SEPARATE DEDUCTION of Rs. 1.5 Lakhs as stipulated in the section.

Its not as if both the owners together have to claim Rs. 1.5 lakhs as deduction.

And the Case Law supporting this argument is

Bombay High Court
Commissioner Of Income-Tax vs P.R. Thakkar on 26 March, 1987

Please correct Me If I Am wrong