I had built a house in my ancestral property owned by my Father.As per Will registered I will be the sole owner of the property after my father.
With the will,property document and no objection certificate from my mother and only sister I approached a state bank and after clearance from there legal department the bank granted me loan for construction of house.
Now the construction is over and when I submitted the Income Tax projection certificate received from the bank in my office I am told that as the property is still in my fathers name I cannot claim the benefit of the loan. Kindly let me know whether I can claim the exemption or not.Manos , Chennai
First thing to know is that deduction of interest is allowed in your hand if the income from property for which loan was borrowed is assessable under the head “income from house property” in your hand.
It is common misconception that only legally registered owner are assessable under section 22 (Income from house property) .The legal requirement of income of a property being assessed in ones hand is not dependent on the legally registered owner itself. In CIT vs Podar Cements Ltd & Others 226 ITR 625 , Supreme Court held as under owner ” is a person who is entitled to receive income from the property in his own right.
You have been granted loan , interest is being paid by you , so income from such property is assessable in your hand and any deduction i.e municipal tax paid, the interest on borrowed fund is allowable as deduction