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CMA Intermediate · Direct and Indirect Taxation · Income from House Property

Mrs. Sunita Rao, an individual, owns one self-occupied residential house with no loan eligible for sections 130 or 131. She incurred Rs. 25000 on repairs and paid Rs. 40000 interest on a loan for repairing the house, which meets none of the section 22(2)(a) conditions. The deduction available for the house is:

The deduction is Rs. 30000. Interest on a loan for repairs does not satisfy the acquisition or construction conditions, so under section 22(2)(b) the interest deduction for the self-occupied house is capped at Rs. 30000.

  1. ARs. 30000Correct
  2. BRs. 40000
  3. CRs. 65000
  4. DRs. 200000

Explanation

The interest relates to repair and is a section 22(1)(b) amount for a section 21(6) property. Since the section 22(2)(a) conditions are not met, section 22(2)(b) caps it at Rs. 30000. Repair expenses are not separately deductible, as the 30% deduction applies to annual value only. Rs. 40000 ignores the cap.

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