HRA AND HOUSE LOAN IN SAME CITY CAN BE CLAIMED.

>> FRIDAY 21 MARCH 2008

I have taken a House Loan for a new house which is far away ( around
16KM ) from my office.( My new house and office are in same city ).I am
staying for rent near to my office.As of now my parents are staying at new
house which was bought on House Loan.and I stay with my wife at the rented
house.CAN I CLAIM BOTH HRA AND HOUSE LOAN FOR TAX BENEFITS ?
Sharath Chandra Reddy

As per income tax act both benefits are independent of each other and there
is no relation what to so ever in claiming HRA exemption and House loan
interest ,if person fulfill conditions to avail benefit given in ACT than he can
claim ,and condition is be checked separately for each section.If law has not
given any condition or linking in both the sections than why DDO are linking
it ,I don't know.lets discuss with provision of the act.

HRA EXEMPTION(HRA EXEMPTION HOW TO CALCULATE)

To claim HRA Exemption following point/condition to be satisfied.

• Persons has a salary income and Getting House rent allowance

• person has actually incurred expenditure on payment of rent (by whatever name

called) in respect of the residential accommodation occupied by him.

• The residential accommodation occupied by the assessee should not be owned by him.

In your case you full fill all the above condition ,means have a salary income ,getting

hra ,paying rent and residing in Rented house.so you are eligible to claim HRA exemption

irrespective of your house loan interest claim.

House loan Interest claim.

while calculating income from house property first annual value of house is to be

determined.

1. House is let out (value will be according to Rent received)

2. House is self occupied by the owner for own residence. (annual value will be nil)

3. house cannot actually be occupied by the owner by reason of the fact that owing to his

employment, business or profession carried on at any other place, he has to reside at

that other place in a building not belonging to him(annual value will be nil)

in situation two and three value of house annual will not be nil if
 1. the house or part of the house is actually let during the whole or any part of the

previous year; or

2. any other benefit therefrom is derived by the owner.

more over if asssessee has more than one house which full fill condition two or three

above than he can take this benefit of annual value as nil ,only on one house at his

option.means Income tax act permits that a person can have more than one self occupied

house but he can avail benefit only for one house and other houses will be deemed to be

let out.

now in your case you are living in rented house so you are satisfying condition of Hra so

you can claim hra exemption.

In case of your own house ,the house is self occupied by you ,it doesn't matter if you are

going to house at weekend or monthly and your parents are living in your own house,it is

covered under definition of self occupied under income tax act.As I have clarified above

In income tax act self occupied definition is not the same as we generally taken and as

per act person can have more than one house as self occupied ,and as per income tax

self occupied means

• house is not let out for whole or part the previous year

• no any other benefit therefrom is derived by the owner

• so you can claim house loan interest.

but i think you are covering yourself in condition three above i.e

"house cannot actually be occupied by the owner by reason of the fact that owing

to his employment, business or profession carried on at any other place, he has to

reside at that other place in a building not belonging to him"

and want to clarify whether this condition is applicable in same city or not.Though

in my opinion your house is self occupied as I have clarified above yet for your

clarification in above condition also there is no condition that your own house can

not be in same city.At any other place does not mean any other city it can be in

same city ,but there should be nexus between non occupation of your house and

your employment,business or profession .