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house property

$AcH!n G (Still Running for My Destination) (1036 Points)

27 August 2008

Mr. kalpesh borrowed a sum of rs. 30 lakhs from the national housing bank towards purchase of a residential flat. the loan amount was disbursed directly to the flat promoter by the bank. though the constuction was completed in may, 2008,repayments towards principal and interest had been made during the year ended 31.3.2008.

in the light of the above facts, state

a) whether MR. kaplesh can claim deduction under section 24 in respect of interest for the assesesment year 2008-09;

b) whether deduction under section 80c can be claimed for the above assessement year, even though the coustruction was completed only after the closure of the year.
pls solve this querry as a student. becuase i want a systematic ANS.

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2 Replies

Rushikesh (Chartered Accountant - Manager Finance) (2375 Points)
Replied 27 August 2008

The deduction u/s 80C can be claimed now itself, as it does not mention about the completion of the construction.

However, for sec24 they need the completion of the construction, which can be deduced from the possession letter issued by the builder or the Completion certification given by the govt. authority.

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CA.E.Deepan Chakravarthy (CA and CS Executive) (462 Points)
Replied 27 August 2008

Hi Sachin

a) i agree with Rushikesh

This is the wordings of Section 80C

80C (2)(xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of.....

For the purpose of claiming deduction u/s.80C for principal repayment towards loan purchased for the purposes of purchase or construction of a residential house, the income from that residential house should be chargeable to tax under the head “Income from house property”. But at the time of construction nothing would be the income from that property. So, Kalpesh cannot claim deduction under section 80C for the repayment of loan.