Hi Vineet,

Section 24(b) specifically mentions that interest on borrowed capital is allowable as deduction, if capital is borrowed for the purpose of Purchase, construction, repair, renewal or reconstruction of the House Property.As in the present case the loan is not utilised for the mentioned purposes,its interest will not be allowed u/s 24(b).

And yaa it may be claimed as a deduction under other head depending upon the purposefor which  the capital has been used.