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Deduction u/s 24b


Hello Sir,

I need an answer on my following query. Request you to kindly answer through email asap as I hardly get chance to watch tv.

My friend and his brother took home loan in joint name. Now my freind is making repayments of EMIs and his brother is getting rental incomes. Is it possible that whole benefit of section 24(b) can be availed by my friend as he is making repayments from his account and his brother show whole rental income in his
taxable income.


Regards,

Sneha



By: SNEHA GUPTA

For the purpose of computing income from house property, the rent/annual value will be taken in proportion to his share in the property. It is not possible that in case of property in joint name, one person can show whole rent in his income.

In CIT v. Bijoy Kumar Almal(1995)215 ITR 22(SC), it has been held that in view of section 26, where house property is owned by two or more persons and their respective shares are definite in respect of such property, deduction provided for by sec. 23(2) has to be allowed to each co-owner separately.

The rent can be shown in the hands of owner of the property only.



By: CA JAGMOHAN SINGH

thanks. So it means rental income will be taxable in the hands of both?

One more question, can one take benefit u/s 80C and 24(b) if he is making repayments of all EMIs from his account and he is the first applicant of the loan?

 



By: SNEHA

If the repayments of all the EMIs are made by him from his account and loan was also taken by him (although he made his brother co-applicant) he will be entitled to benefits u/s 80C and 24(b). Purchase in the joint name shall not disentitle the assessee for claiming the entire exemption.



By: JAGMOHAN SINGH

Dear Sneha,

As already correclty advised by Mr. Jagmohan, below is the treatment of your query.

1) Rent income shall be taxable in the hands of Both. One cannot pay tax on the total income to take benefit of slab rates.

2) However one person can take entire benefit of sec 80C and 24(b) provided his name is included in the registery of property and he is making the entire payment.

If you have any questions, Pl post the same. 

-----------------------------------------------------------------------------------------------

Dear Mr. Jagmohan,

Thank you for your time.

Kind Regards
TaxReply.com


 

 



By: TAXREPLY.COM

It is possible that, the second name is for just for namesake (e.g. in case of husband/wife), the purpose of holding the property in two names is to avoid future litigation in case the real owner passes away. 

In such case, in my opinion, the rent as well as deductions of loan principal and interest should be claimed by the same person in the entirety .

Similarly, it is possible that a person may have have x share in the property entirely financed by borrowings and hence he will pay tax on his x% of  rental  income but claiming 100% eligible deductions u/s 80 C and 24(1)

I shall be delighted to receive any comments on my above view. 

 



By: SHARAD MOHAN

I would like to add that the deduction will be limited to received 



By: CA. MANOJ KUMAR JAIN

thanks a lot for solving my query...all my queations stands resolved now. :)



By: SNEHA



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