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Urgent: need advice regarding 80ee benefit

Alok Kumar (Salaried) (30 Points)

14 January 2014

Dear Team,

I need advice regarding 80EE benefit. I booked one flat in 2010 and availed loan for the same in 2011. This flat is under construction.

Now in addition I have purchased 2nd ready to move in flat in May-2013 which meets 20L, 40L cap limit and home loan sanction in FY13-14 conditions.

There is confusion if this ready to move in home meets “the assessee does not own any residential house property on the date of sanction of the loan" condition when I am waiting for possession of other flat booked in 2010? Or booking the under construciton home with builder and waiting for possession is also treated as owned.

Thanks.
Alok

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5 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 14 January 2014

Few conditions are required to be satisfied for this section to be applicable.

1) The loan is sanctioned between the FY 1/4/2013-31/3/2014. (You purchased the flat in May 2013)

2) The loan sanctioned does not exceed Rs. 25 Lakh. (Your flat price is more than 25 lacs)

3) The value of residential house does not exceed Rs. 40 Lakhs. (Your flat price is less than 40 lacs)

4) The assessee does not own any other residential house as on the date of sanction of the loan. In other words, this house is supposed to be his self occupied property. (The word 'owning' is not elaborated anywhere. You do "own" a under-constructed flat which shall be ready for possession within a few months. Here, the word "own" may mean a right to a capital asset and not necessarily a house in possession)

5) The assessee is a first time home buyer. (you are not the first time home buyer)

There are two points that needs a lot of consideration. Point no. 5 is not fulfilled. And point no. 4 is disputed. This benefits is available to assessee only for one assessement year.

Wait for more replies.

1 Like

Alok Kumar (Salaried) (30 Points)
Replied 14 January 2014

Hi Mihir,

Thanks for the prompt response.

My self-occupied home purchased in May,13 with value of 29L and supported by 20L home loan sanctioned in May,13 too. While other flat booked in 2010 remains in unde rconstruction mode by the time self-occupied home loan was sanctioned. I read clause on page 6 of https://indiabudget.nic.in/ub2013-14/mem/mem1.pdf and confused what's the mean of own in " (iv) the assessee does not own any residential house property on the date of sanctionof the loan." as there no certainity of possession and cost restriction of under construction flat until possession handed over.

Looking for expert view on the same.

Thanks, Alok

Nikhil Kaushik (Fellow CA) (85360 Points)
Replied 14 January 2014

I will have to agree with the earlier opinions here...The intent of the law here is very clear that the first time buyer are to be given benefits. The condition 5 mentioned above is not mentioned in the section.

You may argue that the earlier house is not yet under your possession and only reflects the right in an under-construction property. But I don't think its a strong argument in this case.

So you might not be able to claim the 80EE benefits here.

1 Like

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 14 January 2014

Alok,

I have to agree with Mihir and Nikhil. You might not be allowed deduction under section 80EE in the case at hand. Look, in addition to other reasons, you have already availed deduction under 80C and/or 24 towards principal and interest component for flat purchased/loan taken in 2010.

Regards,

Alok Kumar (Salaried) (30 Points)
Replied 14 January 2014

Thanks to all of you.

No tax benefit has been availed for flat booked in 2010 as that's not under my possession as of now and under construction hence no claim can be made for that flat home loan under section 80c and 24b.

I thought when flat is not considered for any tax benefit until under possession then it should also not be considered as owned until handed over ownership to the customer. Assuming this I thought any flat which comes first under possesion is first owned flat while under construction should be booked one until possession handed over with ownership take ove right.

Not sure if I skip this benefit and later clause looks supportive before filing ITR then does IT website or forms give option to include 80EE benefit post form 16 release by the employer.

Thanks, Alok