Deduction u/s 80c:prepayment/payment of amount borrowed

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CA Rakhi Govil (Querist)

07 February 2012 Hello Expert,

Following are the facts: ,
1) A assessee borrowed Rs. 500000 from a bank( Given as housing Property Loan) for purchase of land (which is approved by a housing development authority on which house will be constructed in near future.

2) at the end of financial year he paid Rs. 100000 to bank as payment of his loan provided no construction has been started till date due to some dispute with the contractor.

Now my question is
1) Is assessee is entitled to claim deduction U/s 80 C for payment of Rs. 100000 ? Since construction has not been started but it was the intention of assessee to construct the house on it , whether he is entitled to for this?
2)He can claim deduction of interest under house property( for pre construction period) , cant he get deduction of principal amount paid before any construction under Sec 80 C?

Please guide me on the above matter..

Thanks in advance.

CA Parth Shah

CA Parth Shah (Expert)

07 February 2012 Hi Rakhi,
1st of all Sec 80C does not have any proviso for allowance of such principle amount hence one can very well claim deduction u/s 80C of such repayment of principle amount of housing loan. The pre & post construction criteria is only for Interest allowance.

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