22 May 2012
Case : A residential plot of land is purchased by Individual (ROR) through bank loan 75% and own money 25% in MAY 2012. Then construction loan for this plot is taken from same bank in June 2012 and constructions is completed by DEC 2012.
Bank provides to borrower two certificates showing principal and interest portion repaid on two loan accounts under home loan scheme.
Can interest portion of EMI's paid on two separate loans be claimed as deduction u/s 24(b)?
What is treatement of principal portion repaid during the FY 2012-2013?
24 May 2012
Sec 24(b)says... where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital......how should we meant the word acquired and property here....does acquired cover plot purchase and then constructions completed from two bank loans.
04 June 2012
The interest payment shall be bifurcated into pre-construction period and post construction period.
For this purpose the DATE OF COMPLETION OF CONSTRUCTION shall be seen and not the Financial Year.
The fact that the construction has been completed BEFORE the end of the year does not mean that interest for the whole year shall be allowed as deduction in the current year itself.
The interest prior to completion of construction shall be allowed in 5 equal instalments and interest post construction shall be allowed in full in the current year itself.