Deemed let out property

There is no problem, Claim this new house property as deemed letout and home town property claim as residential purpose.

No problem in doing so. As per Act, it says if you own 2 props., 1 needs to be shown as SOP and other DLOP if it is not let out. Option to claim SOP is rest in the hands of the assessee. So there is no harm in claiming the property in which your parents stay as SOP. It is a workable arrangement and as per law. 

Most probably interest on borrowed capital is unlimited only if it is let out and not deemed let out. 

Plz see this for further details

https://www.incometaxindia.gov.in/tutorials/income-from-house-property-practical.pdf

No, Interest on Loan is restircted to Rs 200000 on Purchase & Const.(if taken on or after 1/4/99) and Rs 30000 on Repair & Renewal only in case of SELF OCCUPIED PROPERTY.

@ Aditya Sean:

Please elaborate as wrt to your ans. 

Did you mean that interest deduction is not available in case of DLOP and LOP and that it is available only in case of SOP?

Or that you meant that, wrt restriction part is only for SOP and not applicable for DLOP and LOP?

@ S. Shiroor:

No, the act distinguishes the restriction between SOP and others. And others will consider both DLOP and LOP both.

So DLOP and LOP both won't have any interest deduction restriction. 

And accordingly the arrangement made by Ravindra is appropriate.

Refer the bare act for your reference as disclosed below:

Sec 24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:—

(a)  a sum equal to thirty per cent of the annual value;

(b)  where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees :

Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed within three years from the end of the financial year in which capital was borrowed, the amount of deduction under this clause shall not exceed two lakh rupees.

Explanation.—Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years:

Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.

Explanation.—For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.

in case of all other property, intrest on loan is fully allowed.

@ rinkal  - my observations were based on Cell f23 in House property sheet where it is written

 Let out means deemed let out also i found out by filling the sheet just now.  So if the Flat is vacant  one can take any interest

and when self occupied - only interest of  2 lac permitted.

@ S. Shiroor:

Its OK. But a general advice. Do not rely on itr for conceptual understanding because there is a possibility that few of the things may not be mentioned or incorrect as it is just an utility and gets updated if any corrections required. Its always better to go by the bare act to avoid any conflicts. Also you mentioned of a link related to incometax tutorials. Refer pg 9. I hope that will clear your doubt.

Attached here the file that you mentioned

Thanks everybody for responding. Howvere now I am more confused than I was.

Is DLOP treated equivalent to LOP (if I have another self occuied property)? Will I get interest deduction without any restriction or not?

This excerpt from page 9 of filee attached seems to make it clear: