-I had purchased a flat in chennai in year 2003 through POA to me father, as I was NRI based in UK at that time. The cost of flat was 20 lacs. There was a housing loan taken for purchase of this property of 25 lacs as it was raw shell (20 lacs towards property + 5 lacs fixtures and furniture). This complete loan was closed in year 2012. I came back to India in 2005 and sold this flat in XXX.
My questions are following:
1) whether the complete interest cost on total loan be added to the cost of purchase, for the purpose of capital gain calculations. This interest cost comes to nearly 10 lacs.
2) Can this interest cost be indexed, as it was paid in several years from 2003 to 2012
3) Or, can I only claim interest on Loan as deduction for period from 2003 to 2005 (during the time I was NRI). I did not file any ITR in this period as there was no factual income in India and also did not claim any deduction under house property (sec 24), in this period.
15 July 2022
Sir, Thanks for your reply. Will request some clarifications to clear the doubts,
1 and 2) Why interest deduction is not allowed, as this is certainly a cost incurred, on buying the property. In-fact it is quite a substantial cost. It will help to understand the rationale for not allowing the interest cost deduction in computation of capital gains. In-fact I have seen a few judgments also in favor of the same.
3) But sir, If I did not file ITR at that time as there was no income in India, can I not claim the same now for capital gain deduction, as both are different sections.
15 July 2022
As interest is given deduction under sec. 24(b) of Act, it is not given deduction as cost to property, which will amount double deductions. Though in few cases, it is allowed as cost addition, but is not usual practice, you cannot rely upon same favor in your case. Deduction u/s. 24(b) is allowed in the year of interest payment, not in any year of your choice.
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