Income from house property

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Pushkar (Querist)
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28 July 2014 Respected Sir/ Madam

I have a question regarding house property income.

A person has a plan of constructing a 5 storey building.
He has taken loan and completed only ground floor using the entire loan amount.

Now a bank has taken the fully complete ground floor on rent.

The owner has not taken any further loan or started any further activity for construction of remaining floors.

Now my question is whether the building should be treated as incomplete or owner can take deduction u/s 24(b) ?

Please give me suggestion and please give me related case law, if any.

Regards

Pushkar Mitra

Kalam

Kalam (Expert)
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28 July 2014 Interest for preconstruction period is allowable as deduction on completion of the construction. This pre-construction period would be starting from borrowing of funds to the point completion of the construction. In your case construction is already complete as it has been occupied by bank as tenant. The fund which was borrowed for the construction of the specified portion (Ground Floor) has been completed and thus it would not be incomplete construction. Owner can claim deduction under section 24(b).

Kalam

Kalam (Expert)
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