The condition of ownership is a deciding factor as far as deduction pertaining to interest under section 24(b) is concerned.
The same is apparent from the plain reading of Section 24 which begins with the wordings- “Income chargeable under the head “Income from house property” shall be computed after making the following deductions:-“
This implies that ownership of house property is precedent for claiming deduction of interest. Mere payments for interest on a home loan is not suffice for deduction under Section 24B until the property is owned by the assessee.
The provisions laying down the methodology of arriving at the annual value for computing income chargeable under the head of House property, are contained in Section 23. In pursuance of the same, in the case of MR. ABEEZAR FAIZULLABHOY VERSUS COMMISSIONER OF INCOME TAX – (APPEALS) -28, MAHARASHTRA, the conclusion arrived at was that the annual value determination is based on ownership rather than possession. Even if the house property is let out i.e. not self-occupied, the assessee doesn’t become ineligible for the aforementioned deduction.
In instances where the ownership of house property is not in the picture, the benefit of 24(b) cannot be availed since then there would be no income chargeable under the head “income from house property.
Hence, deduction of interest on home loan is not allowed under section 24B if the property is not owned by the assessee.
