05 December 2007
We know that while Housing Loan is preclosed, there would be preclosure interest charges @ some% of the principal oustanding on the date of pre-closure.
My query is that whether the same can be treated as Interest under House property in the year of sale of house property as it is necessarily a interest cost on the housing loan & deductible under Sec 24.
If YES, please confirm as to whether there are any decided cases on this?
IF NO, Please confirm, whether it can be treated as COST OF TRANSFER of the capital asset (house property) and be taken AS DEDUCTION in computing CAPITAL GAIN
19 March 2008
It cannot be taken as Cost of Transfer.
Cost of transfer means cost necessarily incurred for the purposes of transfer. In other words but for the cost, transfer would not have taken place and vice versa.
The interest can be claimed as a decution u/s 24 provided it is not penal in nature.
CAclubindia
