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TMI Blog2013 (5) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining of loan which was availed for acquisition of property, thus it is beyond of comprehension as to how the amount paid as interest for the loan taken is allowable as deduction but the amount paid as prepayment charges of the very same loan is not deductible. Both the direct interest and prepayment charges are species of the term 'interest’. Therefore, set aside the impugned order on this issue and order for the grant of deduction. In favour of assessee. - ITA No.7192/Mum/2010 - - - Dated:- 22-3-2013 - Shri R. K. Gupta and Shri R. S. Syal, JJ. ORDER This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 06.08.2010 in relation to the assessment year 2006-2007. 2. First gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow deduction of Rs. 1.56 crore paid as prepayment charges for the closure of the loan account which was taken for acquisition of property fetching the extant house property income. Under these circumstances the question arises as to whether such amount of `prepayment charges paid to HDFC for closure of loan account is deductible u/s 24(b) of the Act. This provision provides that : where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital shall be allowed as deduction in the computation of income under the head Income from house property . The term interest has been defined in section 2(28A) to mean : interest payable in any manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for acquisition of property. It is beyond our comprehension as to how the amount paid as interest for the loan taken is allowable as deduction but the amount paid as prepayment charges of the very same loan is not deductible. In our considered opinion the payment of such `prepayment charges cannot be considered as de hors the loan obtained for acquisition or construction or repair etc. of the property on which interest is deductible u/s 24(b) of the Act. Both the direct interest and prepayment charges are species of the term `interest . We, therefore, set aside the impugned order on this issue and order for the grant of deduction. 5. Ground no.2 about the deduction in respect of property tax amounting to Rs. 2.03 lakh and ground no.3 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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