INCOME TAX ACT, 1961

Section 24(b)

Income from house property - Deduction of interest under section 24(b) - Assessee alleged to be merely a co-borrower of loan granted by bank -

Assessee claimed loss from house property on account of loan borrowed on capital for construction of house. On enquiry by AO as regards amount of interest paid, assessee explained that renovation in respect of a residential house was made by parents of assessee. Housing loan was granted to parents of assessee in name of his two sons, one of them being assessee. Father of assessee divided construction cost among himself and his two sons. Housing loan obtained from bank was also divided accordingly. AO alleged that assessee was merely a co-borrower of loan granted by bank and held that assessee was not entitled to deduction of interest expenditure on said bank loan under section 24(b). Held: Property vested in assessee as he took liability to pay amount borrowed for purpose of renovation of house property to banker. He was also one of borrowers in that particular loan. Case was very straight that assessee was owner of 1/6 portion of said property for renovation of which amount was borrowed by parents and other applicant including assessee. Any interest arising there on required to be granted as deduction to assessee under provisions of section 24 (b) as assessee was owner of the property. Family settlement deed also could not be held to be a colorable device without examining real motive of the deed. There were no conditions except divisions of the property in family settlement deed therefore, it could not be inferred that it was executed with an ulterior motive. It was a simple partition of property by parents in four sons and themselves.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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