Interest paid on borrowed funds for the purchase of property, ...

Property purchase loan interest deductible from capital gains before 2024 amendment.

Case Laws     Income Tax

November 29, 2024

Interest paid on borrowed funds for the purchase of property, prior to the amendment introduced by the Finance Act 2023 (effective from 01.04.2024), would be deductible while computing capital gains, in addition to the deduction claimed u/s 24(b) of the Income Tax Act. The Tribunal and the High Court have upheld the assessee's claim, following the principle that if two reasonable interpretations of a tax provision are possible, the interpretation favourable to the taxpayer should be adopted. The Tribunal and the Commissioner have consistently allowed the deduction in earlier years, adhering to the rule of consistency. The amendment restricting the inclusion of interest paid as part of cost of acquisition/improvement is prospective and cannot be applied retrospectively.

View Source