Interest on housing loan

Income Tax Act and Accounting standards both are differnent. Whether certail borrowing cost (say interest on housing loan) is capitalised or not is accounitng concept covered in Accounting Standard 16, must see. And whether such interest can deduct from assessee's total income is comes under income tax act/rule. Even you can capitalise borrowing cost but can not get deduction under I.T. Act or vise versa depends on each case.

Next is, indexation applicable in case of sale of long term asset. Indexation use to arrive at indexed cost of asset. In such actual cost shall includes such borrowing cost i.e. interest on housing loan. if you capitalized earlier. Refer Accounting Standard 16.