1. According to sec 24(b), interest on borrowed capital will be allowed as a deduction to the extent of Rs. 2,00,000 or the amount of interest actually paid or accrued during the year, whichever is lower.
2. On a plain reading of the above section, there was no word which says "housing loan" or "specific loan", it should just be for the purpose of construction of House property. Sec 24(b) has not put any restriction on claiming interest on borrowed capital on the personal loan used for the purpose of construction of House property, however, a certificate must be produced to this effect from the bank that the above loan amount was utilized for the purpose of construction of house property.
3. Bank's in most of the cases would hesitate in providing such certificate as "housing loans" will take a lot of procedures and compliances for banks and they need to carry out such procedure for the personal loan to provide such certificate, which is very highly unlikely.
4. So, sec 24(b) does not put any restriction for you to claim to interest on borrowed capital but the second proviso has put the onus on you to provide a certificate from the person to whom your paying interest.
5. If you could get a certificate from the bank, deductions u/s 24(b) will be allowed, otherwise, it cannot be claimed.
Please correct me if the above interpretation has an alternative view.
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