21 February 2008
Construction of the Property was started in June-2007 and it is completed in February-2008. Whether the Pre-EMI (interest) paid can be claimed in the current year as deduction or it should be spread over for 5 years?
Explanation to the Sec 24 says:
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:
In this case there is no interest paid prior to the previous year of completion of construction. The commencement and completion of the construction is within the same previous year
21 February 2008
THE INTEREST ON LOAN FROM THE DATE LOAN IS TAKEN TO THE DATE OF COMPLETION OF CONSTRUCTION OF HOUSE PROPERTY IS PRE CONSTRUCTION PERIOD AND THE INTEREST FOR THAT PERIOD CAN BE CLAIMED IN FIVE EQUAL INSTALMENTS EVERY YEAR.BUT SINCE YOUR STARTING DATE OF LOAN AND COMPLETION OF CONSTRUCTION TAKES PLACE IN SAME YEAR YOU CAN CLAIM FULL DEDUCTION
21 February 2008
The assessee in this case can get full deduction (as reduced by any part thereof allowed as deduction under any other provision of this Act).
CAclubindia
