Relevant date for deduction u/s 80c - urgent

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VIDYA BHOSALE (Querist)
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31 July 2013 Sir,
The housing loan is sanctioned by LIC on
5th March 2013,
LIC has given the cheque of the loan amount in d name of MHADA to d assessee on
30th March, 2013.
But, the assessee has deposited the same in the MHADA A/c maintained by Axis Bank on
2nd April, 2013.
My Query is whether the loan should reflect in the Balance Sheet as on 31st March, 2013?
and from when the deduction u/s 80C for principal repayment of housing loan and u/s 24 for interest on housing loan begins?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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31 July 2013 Since the loan was given before 31st march, 2013 it should appear in the Balance Sheet of 2013 and the 80C should be claimed from A.Y 2014-15 as during AY 2013-14 nothing has been repaid

VIDYA BHOSALE

VIDYA BHOSALE (Querist)
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31 July 2013 Sir,
But how to show it in the Balance Sheet.I mean we will credit the LIC Housing Loan A/c but which account should be debited? I am asking this beceause the amount was not deposited in the MHADA A/c in PY 2012-2013.

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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21 July 2025 Here's a clear breakdown of your query regarding the relevant date for deduction under Section 80C and interest under Section 24 for the housing loan:

Facts Recap:
Loan sanctioned by LIC on 5th March 2013.
LIC issued the cheque in favor of MHADA on 30th March 2013.
Assessee deposited the cheque in MHADA account on 2nd April 2013.
Query:
Should loan be shown in Balance Sheet as of 31 March 2013?
From which year can deduction under Section 80C (principal repayment) and Section 24 (interest) be claimed?
How to show this loan in Balance Sheet when money was not deposited with MHADA before 31 March?
1. Loan Recognition in Balance Sheet as on 31 March 2013
Since the loan was sanctioned and cheque issued before 31 March 2013, the liability for loan exists as of 31 March 2013.
Even if the money was not yet deposited in MHADA account (beneficiary), the assessee has a legal liability and has received the loan cheque.
Thus, the loan should be shown as a liability in the Balance Sheet for FY 2012-13.
2. From When Deduction under Section 80C and Section 24 Begins?
Section 80C deduction for principal repayment:
Deduction is allowed only when the actual repayment of principal is made during the financial year.
In your case, no repayment has been made during FY 2012-13 (loan sanctioned but no principal paid back).
Hence, deduction under Section 80C will start from AY 2014-15 (i.e., from the financial year in which principal repayment starts).
Section 24 deduction for interest on housing loan:
Deduction is allowed when interest is actually paid or accrued (depending on accounting method).
Typically, interest starts accruing from the date the loan amount is disbursed.
Since the loan amount was disbursed (cheque issued) before 31 March 2013, interest for FY 2012-13 may be claimed if accrued, but only if the loan amount was actually credited to the builder (MHADA) by 31 March.
Since deposit happened on 2 April 2013, practically interest will start from FY 2013-14.
3. Accounting Treatment in Balance Sheet
Credit: LIC Housing Loan Account (liability side).
Debit: Loan Account / Advances given or Suspense Account temporarily, since the amount has not yet been credited to MHADA as on 31 March 2013.
Once the amount is credited to MHADA, debit the MHADA account and clear the suspense account.
Summary:
Aspect Position
Loan recognition in Balance Sheet Yes, show loan as liability as of 31 March 2013
Deduction under Section 80C From FY 2013-14 onwards, when principal repayment starts
Deduction under Section 24 From FY 2013-14 onwards, when interest starts accruing
Accounting treatment Credit loan account; Debit suspense/loan account till deposit to MHADA

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