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TMI Blog1985 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... t the loss the assessee has taken into consideration, the interest payment of Rs. 11,413 paid to the Superintendent Engineer, Public Health, West Circle, Hyderabad, for the house purchased in Middle Income Group Housing (MIGH) Scheme. The ITO disallowed the claim on the ground that the interest payment is not relevant for this assessment year. On appeal, the AAC directed the ITO to allow interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y allowed. 3. I have considered the rival submissions. The assessee had purchased the house under the MIGH Scheme. Under the above scheme, the assessee will have to pay initial deposit and the balance of the cost of the house is treated as a loan which is repayable in instalments with interest. I am told that the above loan is repayable in 25 years by way of instalments. After adjusting the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the MIGH Scheme. Under clause (vi) of sub-section (1) of section 24 where property has been acquired with borrowed capital, the amount of any interest payable on such capital is deductible from the income from house property. The words used in the above clause (vi) are 'interest payable'. In contrast to this in clause (vii) the word used is 'paid'. Thus, on account of the clear language used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est for the earlier years cannot be allowed in this year. The interest relatable to this year alone can be allowed. In Abdul Hussein Essaji Arsiwalla's case it was held as under : "... In our opinion, the allowance having been allowed in respect of the income of the previous year and the allowance being claimable irrespective of whether the amount is actually paid or not, the extent of the allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case. 4. In my view the interest relating to the earlier years is not allowable as deduction in this year. Only the interest relating to this year is allowable. I reverse the order of the AAC. Since the ITO has not allowed the interest which relates to the previous year relevant to this assessment year, i.e., 1981-82 which is allowable I direct the ITO to allow the interest to the extent i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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