1. assessee returned income of Rs. 15,280 which included loss of Rs. 7,754 under head 'Income from house property'. In arriving at loss assessee has taken into consideration, interest payment of Rs. 11,413 paid to Superintendent Engineer, Public Health, West Circle, Hyderabad, for house purchased in Middle Income Group Housing (MIGH) Scheme. ITO disallowed claim on ground that interest payment is not relevant for this assessment year. On appeal, AAC directed ITO to allow interest payment as claimed since assessee has been following method of cash system. Against same, revenue has preferred this appeal. 2. learned departmental representative kly urged that interest of earlier years cannot be allowed in this year. interest relating to this year alone is deductible. AAC was not justified in allowing claim on ground that assessee follows method of cash system of accounting. In this connection he placed reliance on decisions in CIT v. Abdul Hussein Essaji Arsiwalla [1968] 69 ITR 38 (Bom.) and ITO v. Dwarkadas Shah Bros. (p). Ltd. [1974] 95 ITR 527 (Cal.) learned counsel for assessee submitted that in this year part of principal and entire interest due has been paid. hence, it has been rightly allowed. 3. I have considered rival submissions. assessee had purchased house under MIGH Scheme. Under above scheme, assessee will have to pay initial deposit and balance of cost of house is treated as loan which is repayable in installments with interest. I am told that above loan is repayable in 25 years by way of installments. After adjusting amounts paid earlier, assessee paid in this year part of amount due towards principal and entire interest due. Such interest paid amounted to Rs. 11,413. question for consideration is whether said interest of Rs. 11,413 is allowable as deduction. section 24(1) (vi) of Income-tax Act, 1961 ('the Act') reads as under: "(1) Income chargeable under head 'Income from house property' shall, subject to provisions of sub-sector (2) be computed after making following deduction, namely:- (i) to (v) ** ** ** (vi) where property has been acquired, constructed, repaired, renewed o r reconstructed with borrowed capital, amount of any interest payable on such capital;" There is no dispute that house property has been purchased out of borrowed capital under MIGH Scheme. Under clause (vi) of sub-section (1) o f section 24 where property has been acquired with borrowed capital, amount of any interest payable on such capital is deductible from income from house property. words used in above clause (vi) are 'interest payable'. In contrast to this in clause (vii) word used is 'paid'. Thus, on account of clear language used in clause (vi) interest payable in that previous year alone is allowable irrespective of fact whether it is paid or not. O n loan amount interest was payable on yearly basis. It may be that interest is paid at end of installments but it is payable on loan on yearly basis. Hence, interest relatable to each year also can be allowed as deduction in computing income from house property. question of following any cash system of accounting does not arise in view of clear language used i n above provision. Deduction is allowable in respect of income of previous year from house property irrespective of whether amount is actually paid or not. deduction allowable is only amount which pertains to year of account. arrears of interest for earlier hers cannot be allowed in this year. interest relatable to this year alone can be allowed. In Abdul Hussein Essaji Arsiwalla's case (supra) it was held as under: "... In our opinion, allowance having been allowed in respect of income of previous year and allowance being claimable irrespective of whether amount is actually paid or not, extent of allowance is only such as would pertain to year of account. thus, amount of interest on mortgage or other capital charge would be amount of interest on for previous year and neither arrears of interest for prior years paid in previous year nor interest for future years paid in advance during said year ...." above decision was followed by Delhi High Court in Gulab Singh & Sons (P.) Ltd. v. CIT [1974] 94 ITR 537. In CIT v. M. CT. Muthiah [1979] 118 ITR 104, Madras High Court held that it is clear form clause (vi) of sub-section (1) of section 24 that whether assessee paid interest or not amount payable with reference to particular year would alone represent deduction. ratio laid done in above cases squarely apply to instant case. 4. In my view interest relating to earlier years is not allowable as deduction in this year. Only interest relating to this year is allowable. I reverse order of AAC. Since ITO has not allowed interest which relates to previous year relevant to this assessment year i.e., 1981-82 which is allowable I direct ITO to allow interest to extent it relates to disallowance of interest which relates to earlier years. 5. In result, appeal is partly allowed. *** INCOME TAX OFFICER v. K.G. PATHKI