Section 24(b) of the Income Tax Act
Income-tax Act, 2025: s.22
Section 24(b) falls under section 24 of the Income-tax Act, 1961, which corresponds to section 22 (Deductions from income from house property) of the Income-tax Act, 2025.
Read section 22 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 24(b) is CIT v. Mithilesh Kumari (92 ITR 9), cited in 54 of the 545 judgments on BharatTax that turn on this section.
Leading authorities on Section 24(b)
Interest on borrowed capital used to acquire an asset, paid year after year until the date of sale, must be capitalized and included in the cost of acquisition for computing capital gains.
The nature of the activity giving rise to income is fundamental in determining the deductibility of expenses. Interest on loans for acquiring properties held as current assets is a deductible business expenditure if incurred for business purposes.
Expenditure incurred towards the purchase of shares is a capital expenditure and therefore, interest expenditure incurred on such purchases is not eligible for deduction under Section 36(1)(iii) of the Income Tax Act.
Expenses incurred prior to business commencement but after business setup are deductible as revenue expenses, as the setting up and commencement dates of a business are not necessarily the same.
In the interpretation of taxing statutes, exemption provisions are to be construed strictly, but once eligibility criteria are met, the exemption notification should be liberally construed to give it full play.
Interest income generated from fixed deposits, if purchased due to business exigencies or for the purpose of carrying on business activities, is to be treated as business income and not income from other sources.
When an assessee opts for the presumptive taxation scheme under Section 44AD of the Income Tax Act, offering income at a specified percentage of gross receipts, they are exempt from maintaining books of account and are not obligated to explain individual entries of cash deposits unless such entries lack nexus with the gross receipts.
Interest paid on borrowed funds used to purchase FDRs is deductible as an expenditure incurred wholly and exclusively for earning taxable interest income, establishing a clear nexus between borrowing and earning interest.
Mortgage expenses and interest payable on a mortgage used as part of the purchase consideration are included in the cost of acquisition for computing capital gains on the transfer of property.
Maintenance charges received for the promotion and upkeep of a mall are business receipts assessable under the head 'Income from business'. This applies even if part of the premises is sold on an outright sale basis.
