Hii
you can claim expenses such as litigation expenses as deduction from interest income but as per my knowledge can’t claim home loan interest and service tax/gst
Tax rebate on income from other source
I am a salaried person and I had booked a property but due to some unavoidable circumstances I had cancelled my booking and as per court order, got refund the principle amount plus Rs5.2 lakhs as interest from builder. The property was not registered in my name. I had paid around Rs3.5 lakh as home loan interest in last 5 years and Rs1.26 lakh as Service tax+GST to builder which I have not claimed any where earlier. Now income tax is demanding Rs1.7 lakh as tax for income from other source clause i.e Rs5.2 lakh(interest). May I get any rebate against my expenditure to reduce the tax amount??
Asked 3 years ago in Income Tax
There are contradictory judgement in this situation where some court have held that this income is taxable and some say this is capital receipt hence not taxable.
Any which ways if this is considered as income from other sources and charged to tax, deduction of all the above expenses is difficult as expenses under income from other sources is only available if it has direct nexus with earning of income and it won't be possible in your case.
You can read one judgement here: https://abcaus.in/income-tax/compensation-builder-failure-give-possession-flat-non-taxable.html
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
You can get deduction of home loan interest paid amount and not for service tax.
- There are two options available to you.
1) Justify Rs.5.20 lacs is not interest but it is a compensation for loss of value of money during these years.
OR
2) Claim interest and GST/service tax deduction from 5.20 lacs as the purpose of loan is to invest money in the property. It will be allowed.
Please take phone consultation for detailed discussion.
Hi
If you received any amount as a compensation that will be treated as capital receipts that won't be taxable.
Hello,
If this is considered as income, you can claim the deduction of the interest cost.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Dear Sir,
Hope you are doing well !!
Yes, You can adjust the same.
It is advisable to take a phone consultation for detailed discussion.
Hi
The interest of 5.2 lacs would be taxable under the head other sources. You can claim deduction of costs incurred which are directly relatable to such income.
Claiming of interest paid towards home loan and service tax could be litigative but in my opinion, these could be claimed and you need to pay income tax on net income only.
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