80c
This query is : Resolved
25 February 2012
As per Sec 24 of the I.T.Act, the interest paid on capital borrowed for the period prior to the year in which the property has been constructed would be available on acquisition/complete construction of the property and this would be divided in 5 equal instalments. What would happen to the principal amount. Is the deduction U/s 80C for the principal payment available from the year in which it has been paid or it is also allowed after the construction is completed? Kindly guide.
25 February 2012
Principal portion of the loan repaid for the period prior to the completion of the residential house will not be allowed as a deduction under section 80C (2)(xviii) either in prior period or subsequent period of completion.
CA PARAS BAFNA
(Expert)
25 February 2012
S 80C(xviii)..
starts as under ..
.
for the purchase or construction of a residential house property the income of which is chargeable to tax under the head "IFHP" (or which would.....that head).
.
1. The reply generally focuses "objectively" on the issue that -
" Whether the income is chargeable to tax under the head "IFHP" ????
.
2. However, due weight is not given to the "subject" for which these provisions have been brought into the law. The purpose of the provision is clear -
"for the purpose of purchase or construction of a residential house property"
.
3. The suspicious part of the provisions which improvises us to make the view "OBJECTIVELY" is
"a residential house property the income of which "is" chargeable to tax under the head "IFHP" "
.
Here "is" can not be transformed for the future completions by inserting phrases like - "shall" / "shall be" or "likely to be" as it would have created multiple or irrelevant interpretations.
.
Hence, we may infer "is" as if serving in reference to the future IFHP also.
"Is" may be construed as "will be" in English Grammar also. (Example- He is going to Surat on Sunday).
.
Section 24 restricts claim of interest till completion. But does not out rightly, denies interest CLAIM.
.
In the absence of any expressed denial we can conclude that law allows us to claim deduction. Lawmakers know that construction takes time and drafting a provision has its own limitations. In such cases we have to follow the intention of the law.
.
Had they intent not to provide deduction before completion they could have insert an expressed provision like Section 24.
.
starts as under ..
.
for the purchase or construction of a residential house property the income of which is chargeable to tax under the head "IFHP" (or which would.....that head).
.
1. The reply generally focuses "objectively" on the issue that -
" Whether the income is chargeable to tax under the head "IFHP" ????
.
2. However, due weight is not given to the "subject" for which these provisions have been brought into the law. The purpose of the provision is clear -
"for the purpose of purchase or construction of a residential house property"
.
3. The suspicious part of the provisions which improvises us to make the view "OBJECTIVELY" is
"a residential house property the income of which "is" chargeable to tax under the head "IFHP" "
.
Here "is" can not be transformed for the future completions by inserting phrases like - "shall" / "shall be" or "likely to be" as it would have created multiple or irrelevant interpretations.
.
Hence, we may infer "is" as if serving in reference to the future IFHP also.
"Is" may be construed as "will be" in English Grammar also. (Example- He is going to Surat on Sunday).
.
Section 24 restricts claim of interest till completion. But does not out rightly, denies interest CLAIM.
.
In the absence of any expressed denial we can conclude that law allows us to claim deduction. Lawmakers know that construction takes time and drafting a provision has its own limitations. In such cases we have to follow the intention of the law.
.
Had they intent not to provide deduction before completion they could have insert an expressed provision like Section 24.
.
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