Capitalization of pre construction interest (house property)

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priya (Querist)
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05 August 2015 Dear Sir,

I have two questions,

1) Do we have the option to capitalized the Pre-Construction interest, in case we are not taking deduction of Pre-Construction Interest in five consecutive Years.

2) Can an employer give the deduction of Pre-construction interest under House Property head, before the completion of construction.

Thanks in Advance

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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05 August 2015 For both the questions:-

The pre-construction interest will be capitalized till the construction is complete.
Employer can not allow deduction unless the house porperty is fully constructed.

priya

priya (Querist)
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05 August 2015 Thank you Sir,

Can we add the capitalized Pre construction interest to the cost of House Property, If we Don't want to take deduction U/s 24 of the IT Act 1961, in five (5) consecutive years......

Thank You

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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05 August 2015 The section specifically says, while computing the income under house property, the deduction of pre construction has to be claimed the the five consecutive PYs beginning from the PY in which the construction is complete.

I have never seen a practice of capitalizing the pre-interest to the cost of asset. but let me tell you, you may do so.

priya

priya (Querist)
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05 August 2015 Sir Please Suggest me If there is any Suggested article or Provision Under IT Act 1961

Thank You

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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05 August 2015 I would give it to you asap.
Got some urgent works to attend. Will surely help u out..

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