Section 27

Tax queries 673 views 7 replies

Focus

CA-Final Student

272 Points Joined July 2008

Could someone explain me section 27 of the Income tax act.

If a person has taken a loan for a flat , and the construction of the building is completed within 3 years, however, the person has not yet taken possession of the flat, is he considered a deemed owner.

If this property is deemed self ocuupied property of such person can he tak dedcution under section 24 w.r.t Interest on loan to the extent of rs. 150000 or only Rs. 30000.

Please clarify.

thanks & rgds

Replies (7)

shikhar

LEARNER

1394 Points Joined August 2009

Helloo....Friend

Deduction for intrest wil be taken only from that year from which loan has been repaid fully OR the property acquired.

For example if u acquired a property on 1st may 2013, then u can clain all the interent (till march 2013) in 5 equal instalments.

if your total interest is 50,000 (till march 2013) then u can clam 50000/5= 10000+ intrest of current year (from 1st april 2013 to 31st march 2014) in fy 2013-14

in case of self occupied property u can clain deduction 30000/150000

Rs 150000 if ,u borrowed on or after 1st april 1999 and construction is completed in 3 years from the end of fy in which the capital is borrowed.

THANK YOU

SHIKHAR

Mihir

Wealth Manager

5293 Points Joined December 2008

Interest on housing loan cannot be claimed before possession.

Focus

CA-Final Student

272 Points Joined July 2008

But as per section 27 of transfer of property the assessee is a deemed owner of the property and so he can claim deduction of Rs. 150000 if the completion of construction is before three years even if he has nto taken possession as there is an agreement and he has a right in the property. Am I correct?

CA LOVELY ARORA

C.A. B.Com (H) Graduate

2151 Points Joined August 2008

Dear Focus,

you are not a deemed owner for the said property.
As you must have paid the substantial amount to the owner and must have allowed to take possession, then only you would be considered as a deemed owner, which is not the case here.
Kindly read Sec. 27(iiia) of I.T. Act.

And thus, you can't claim interest on the said property.

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405

shikhar

LEARNER

1394 Points Joined August 2009

YOUR CASE IS DIFFERENT THEN TRANSFER OF PROPERTY............in your case u r not deemed owner....until u not accuired the property OR fully repaid the loan

READ THE BELOW...

Section 53A in The Transfer Of Property Act, 1882

53A. 1[ Part performance.- Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.] CHAPTER III OF SALES OF IMMOVEABLE PROPERTY CHAPTER III OF SALES OF IMMOVEABLE PROPERTY

THANKS

Shikhar

Focus

CA-Final Student

272 Points Joined July 2008

But the property for which the loan has been taken, construction has been completed

CA LOVELY ARORA

C.A. B.Com (H) Graduate

2151 Points Joined August 2008

Dear Focus,

But as also said by others... you are not a deemed owner of the house, till now.

On the date when you will make payment of the house and take possession or the date on which house is registered on your name, thereafter you are free to claim the interest payment made by you as deduction u/s 24(b). Not before that.

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com