Your Taxes

I filed my income tax return for AY 2014-15 on time but I did not claim interest expenses paid on my house property. Now, a chartered accountant tells me that I can claim interest paid on house property against my business income.Can I revise my AY 2014-15 return now?

Kamal Mall

According to Section 139(5) of the Income Tax Act, 1961, a return of income filed on or before the due date can be revised any time before the expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. For AY 2014-15, the tax return can be revised on or before March 31, 2016.

Further, according to the inter-head set-off provisions, the loss from house property (arising on account of the deduction for interest on loan on property) can be set-off against business income.

Accordingly, you could revise the tax return by setting off the loss on account of interest paid against the business income. Please note that such interest claim has to be duly supported by a certificate from the financial institution granting the loan.

I had purchased a property in FY 2008, possession of which was given in FY 2012. It is a let out property. I have not claimed any deduction towards interest paid during construction. Can I claim the same now? Due to repayment and extra prepayments, the loan amount has reduced.

This year, I have got a top-up loan. Now, the total loan amount is higher than the loan originally at the time of purchase. Can I claim interest deduction on both the loans or only the original loan?

Anshuman

Based on the provisions of the Income Tax Act, 1961 (‘the Act’), you could claim deduction for pre-construction interest in five equal instalments starting from the year in which construction is completed.

Hence, you could have claimed the total pre-construction period interest in five instalments, effective FY 2012-13 until FY 2016-17. You could revise the tax returns for FY 2013-14 and FY 2014-15 to claim this deduction. It is not possible to revise the return for FY 2012-13 as it is time barred. However, you could make a request to your jurisdictional tax officer (highlighting the fact that you have not claimed the deduction in the tax return), along with documentary evidence (in the form of interest certificate from the financial institution and construction completion certificate from the builder).

On your query relating to getting deduction for interest on top-up loan, this depends on the nature/purpose of the loan. If the top-up has been taken for improvement to the property, you could claim deduction under Section 24 of the Income Tax Act, 1961, for interest payable on the same. However, if you have taken an additional amount based on the original eligibility and received a consolidated certificate for interest payable from the financial institution, the arrangement may have to be evaluated to check if you could claim deduction for the interest payable on the top-up loan.

The writer is Partner, Deloitte, Haskins and Sells LLP. Send your queries to taxtalk@thehindu.co.in