Assessee entitled to claim deduction u/s 48 of housing loan interest paid for remaining amount over and above already claimed u/s 24(b) of the Income Tax Act.
In A recent judgment, ITAT Surat has held that the assessee is entitled to claim deduction u/s 48 of housing loan interest paid as cost of improvement in respect of remaining amount which was not part of deduction already claimed u/s 24(b) of the Act.
ABCAUS Case Law Citation:
4645 (2025) (07) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in confirming the disallowance of claim of Indexed cost of Improvement of made u/s 48 of the Income Tax Act, 1961 (the Act) while computing the Long Term Capital Gains on the ground that assessee had claimed double deduction of housing loan interest u/s 24 and 48 of the Act.
The assessee had filed his e-return of income claiming long term capital loss on sale of residential house.The case was selected for scrutiny assessment through CASS under limited category.
During the course assessment proceedings, the Assessing Officer (AO) noticed that the assessee had sold an immovable property (flat) and shown capital loss. In the computation of capital gain/loss the assessee had claimed Indexed cost of acquisition and Indexed cost of improvement.
The AO observed that the assessee had also claimed deduction of interest paid on home loan u/s 24(b) of the Act over the years. He observed that while computing the capital gain, the assessee had also claimed deduction of interest paid on home loan as cost of improvement u/s 48 of the Act.
The AO noted that it was a case of claim of double deduction, firstly, u/s 24(b) of the Act and then u/s 48 of the Act, of the same amount. He accordingly disallowed the claim of the assessee u/s 48 of the Act claimed by the assessee as cost of improvement on account of interest paid on home loan and made the impugned addition.
Before the Tribunal the assessee submitted that, it was not a case of claim of double deduction. The assessee submitted that out of the total housing loan interest paid, he has claimed deduction u/s 24(b) of the Act to the extent admissible, which was Rs.1,50,000/- per year. That, the assessee has claimed deduction u/s 48 of the Act, in respect of the remaining of amount of interest paid on home loan.
The assessee submitted that the deduction claimed u/s 24(b) of the Act had been deducted, while claiming Indexed cost of improvement u/s 48 of the Act, out of the total home loan paid. He, therefore, submitted that it was not a case of claim of double deduction of the same amount.
The Tribunal observed that it was not disputed that the assessee is entitled to claim of interest paid on housing loan as Indexed cost of improvement. The only objection raised by the lower authorities was that the assessee having claimed deduction u/s 24(b) of the Act was not permitted to claim deduction u/s 48 of the Act, at all even in respect of one remaining amount which was not part of deduction claimed u/s 24(b) of the Act.
The Tribunal rejected the contention of the Department and opined that it was not a case of double deduction of the same amount. The assessee, in this case, had claimed deduction over the years u/s 24(b) of the Act, upto the extent of admissible amount, i.e. Rs.1,50,000/- out of total housing loan interest paid ranging from Rs. 5 lakhs to 8 lakhs approximately.
The Tribunal stated that no doubt, the assessee was not entitled to double deduction on the same amount, however, there is no provision under the Act, barring the claim of deduction of the remaining of housing loan interest paid after deducting the amount for which deduction has already been claimed u/s 24(b) of the Act.
Accordingly, the Tribunal restored the issue to the file of the AO to verify the claim of the assessee and allow the Indexed cost of improvement to the assessee of the balance amount, after subtracting the amount of deduction already claimed u/s 24(b) of the Act over the years.
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