Possession Certificate from Co-Operative Society is valid proof for allowing Income Tax Deduction for Home loans: ITAT Mumbai [Read Order]

In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal held that in order to claim deduction under section 24(2) of the Income Tax Act, 1961, the assessee need not submit the possession certificate from the Government authority. While accepting Possession Certificate from co-operative society as a proof for allowing deduction, the division bench of the Tribunal emphasized that to claim a deduction of interest against a home loan, a taxpayer is not required to submit a completion certificate from the Government. The order will be a great relief for the tax payers in Mumbai.

In the instant case, the assessee, an individual, claimed deduction in respect of interest in respect of house loan u/s. 24(b) of the KVAT Act. The said claim was disallowed by the Assessing Officer on ground that the assessee failed to produce completion certificate from the appropriate authority indicating completion of the flat. On appeal, the Commissioner of Income Tax (Appeals) sustained the assessment order and hence, the appellant preferred a second appeal before the ITAT.

As per section 24(2), the assessee should acquire or complete construction within three years from the end of financial year in which the capital was borrowed. The division bench found that the assessee has furnished certificate from the Cooperative Society indicating the date on which the possession of the flat handed over.

While quashing the order impugned, the Tribunal noted that “the proviso nowhere states that the assessee should furnish completion certificate from the appropriate (Government) authorities. In our view, the evidences furnished by the assessee sufficiently prove that the assessee has taken possession of the flat during the relevant financial year under consideration. Accordingly we are of the view that the assessee is entitled to claim deduction of Rs.1,50,000/- u/s 24(b) of the Act.”

Read the full text of the order below.