Reg Home Loan

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Rajasekar

TDS Preparer

1464 Points Joined September 2017

This is the scenario of an as see
The house is in husband's name(100 %). Loan was taken by both husband and wife. During IT calculation husband wants to take the benefit of interest paid and wife takes the benefit of principle amount so that both of them wants to show NIL TAX?
I told them it is not possible and the law does not allow this.
But they said they have done like this with the previous years with their previous employers.
a)Is it correct?
b)If not what will happen to the previous years returns?
c) How will the dept know the property owner and who claimed the benefits?

Replies (2)

Nihar Ranjan Rout

CA Final & CS Final

577 Points Joined August 2012

Answers in order: -

a) No doing that is not correct. Either they have to claim in ratio of property holdings or their contribution of the EMI. But the bifurcation has to be done for Principal "AND" Interest.

b) They have escaped assessment till now, mostly because processing has happened through CPC and not by an officer. Once, caught all old AYs can be opened.

c) The Dept. can cross check this from the banker where the assessee's PAN or Aadhar has been linked.

A B Kundu

Professional

1427 Points Joined August 2012

a) No it's not correct. Co-borrower must have a share in the property, then only she can avail the tax deduction benefit. Refer the following article in support of the opinion -

https://www.relakhs.com/joint-home-loan-eligibility-rules-income-tax-benefits/

b) & c) Until and unless the department gets any clue from any other sources regarding these treatments which arises suspicion in their mind, nothing would happen. But if the jurisdictional AO or any other higher officer will have reason to believe about the same, then they might issue notice U/s 143 as well as U/s 148 for earlier years.

Department can gather information from the bank itself because at the time of taking loan the assessee must have submited the property documents in which it's clearly evident that the husband is only the owner.