query about Pre Construction Period Intt. u/s 24 of Income T

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pradeep (Querist)
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28 February 2009 Sir,

I have an query about Pre Construction Period Intt. u/s 24 of Income Tax Act :

Case : Suppose Mr. A buy a residential plot & start construction of house by taking loan from bank. Now, after the completion of construction, he has to avail the tax benefit of pre construction period interest in 5 equal instalments. For the first year, he availed the benefit of pre construction intt. (1/5 share).

Thereafter , he sold the same property.

Now, the question is What to do with balance four instalments of pre construction period interest???

Whether he can take benefit u/s 24 as usual without having ownership of that house?

or

he should consider as the cost of that property for calculating capital gain/loss.

Kindly Advise with provisions of the Act & case laws.

Thanks & Regards,

CA PRAMOD SARAOGI

CA PRAMOD SARAOGI (Expert)
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01 March 2009 In my view , the balance four installments should be added to the cost of acquisition of the property and should be deducted from the Sale Consideration.