sir this is the query of a client please help me resolve...........
I am working in Government of Delhi Dept and the audit has raised observations that the dual benefit of rebate on account of Rent paid for rented property under section 10 and simultaneously of interest paid on the home loan borrowed for purchase of property in the same city under section 24 is not admissible. Audit is of the view that only one benefit is admissible.
In this connection I intend to clarify that I purchased a property DDA flat in Rohini in the year 2003-04 after taking home loan. I could not shift in the property due to non-availability of proper civic amenities and proper transportation to my place of office at ITO. So I was residing in my parental house and paying monthly rent to my mother. Hence I sought both the rebates i.e. Rent paid less 10 percent of gross salary or HRA actually received whichever is less as admissible to govt. employee under section 10(13) of the Income Tax in the year 2008 -09 and 2009-10and also the rebate of Interest paid on borrowed capital for purchase of house under section 24. I have the possession of house and the property remained vacant through out the period and no income has been earned from it till date considering the income for self occupied property as nil(under section 23(2)(a).
Please advice whether the action of the audit is in order or not. Your clarification on the issue will help me to save from the recovery of undue demand raised by the audit by disallowing the rebate of Interest on borrowed capital.
CAclubindia
