Why Only Rs 30,000 Allowed as Deduction u/s 24 For Interest on Loan Borrowed For Repairing of Self Occupied House?

If I have taken a housing loan for the purpose of renovation of house and interest for the F.Y. 2008-09 is Rs.60000/- against the same loan. How much benefit i can get if
(i) house is self occupied ?
(ii) and if house is let out?

Vineet Sharma, New Delhi

Interest u/s 24 from house property income is allowable even when the house is self occupied and it is also allowable for loan borrowed for the purpose of repairing . Clause b of section 24 states as under

24 : Income chargeable under the head “income from house property” shall be computed after making the following deductions , namely

(a)………………

(b) where the property has been acquired ,constructed ,repaired, renewed or reconstructed with borrowed capital , the amount of any interest payable on such capital.”

There are two proviso under section 24 of the I T Act.

The first  proviso provides that the interest is allowable only upto Rs 30,000 in case covered u/s 23(2) i.e self occupied house.

The second proviso provides that if the house is constructed within 3 years and self occupied , in such case the interest will be allowed up to Rs 1,50,000 . However , in that proviso , words “purchased or constructed “ are used . No mention of repair or reconstruction .

Therefore , it follows that in case of loan is borrowed for self occupied property , maximum interest allowable is Rs 30,000 only because repair of self occupied house is covered under first proviso.

As far as rented property is concerned , there is no limit regarding the deduction of interest .

In your casei f the property is self occupied , the interest allowable is only Rs 30,000.

If the property is rented Rs 60,000 shall be allowed.