Capitalization of interest on house property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2014 hi
i had purchase one commercial property which is under construction, for business purpose and registered in the name of business and capitalised the same, and the payment was made via bank loan.

now after 3.5 year i want to sale the property ( at this time property was under construction ) and not put to use.

now the query is should i capitalise the interest portion or not??
if yes, then at the time of sale may i take the indexation benefits on capitalised interest portion or not?
if yes, then on what basis,

1. as improvement cost ( on yearly interest ) or
2. on total cost capitalised value of property ( Including interest ).

Nikhil Kaushik

Nikhil Kaushik (Expert)
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08 January 2014 1. yes, you will capitalize..

2. the indexation will be available year on year basis ie the interest paid in each year would be indexed separately...

However, there is one question, when did you get the possession of the property?? if the possession is less then thee years old, then it would be taxed as STCG and indexation wont be available. period before the possession wont be considered as holding period.

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