Interest Deduction under Section 24 IT Act

Dear All,

Please help me here as there are conflicting information about this.

I have a house in Mumbai where I do not live ( due to employment) and I live in New Delhi. The house is the only house I own and its not rented out to anybody.

The house in Delhi is taken by me on rent and I live there for my employment.

Now under section 24, the annual value of my house can be taken as NIL as I fulfill the following conditions

The assessee must be owner of only one house property.

• He is not able to occupy the house property because of

his employment, business etc. being away from place

where the property is situated.

• The property should not have been actually let.

• He has to reside at the place of employment in a building

not belonging to him [Section 23(2)(b)].

• He does not derive any other benefit from the property

not occupied.

Now I wanted to know the following 1) Is the entire interest paid by me for such a house deductible under the incomne tax act without ceiling ? For example if I am paying Rs 2.5 Lakhs interest, it would be totally deductible. On the internet there are contradicting information so I need help and a reference to the clause basis which i can do this.

Some say that in all cases the maximum limit is 1.5 Lakhs.. is this correct ?

Thanks in advance

Kartik

24.Deductions from income from house property.

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 one lakh fifty thousand 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.

The following third proviso and Explanation shall be inserted after the second proviso to section 24 by the Finance Act, 2002, w.e.f. 1-4-2003:

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 capital borrowed, for the purpose of repayment of such capital.