In this case, A & B are the 'co-owners of the property' whereas A, B & C are are 'co-borrowers' in respect of loan.
Deductions u/s 24 is allowable to him who is taxable for house property income u/s 22.
In this case, income is taxable in the hands of A & B because they r co-owners of the property. C can't be taxable for such income b'coz he is not co-owener. Hence, even if, he is co-borrower in loan, the income from which such deduction for interest payemtn is to be made is not taxable in his hands. Hence C can't take deduction when effectively income is not taxable in C's hands.
In this respect, Sec.26 is also effectively talks about co-owners of the property. Co-borrowing benifit is given to those who are also co-owners. Simply b'coz the person is co-borrower, doesn't extend benifit of deduction of interest when effectively the income out of which such deduction is to be claimed is not taxable to him.!!!
As far as Sec.80C is concerned, it also says that 'property, the income from which is chargeable to tax u/s 22'. Hence it also talks on the same lines as Sec.22. Hence the same test applies i.r.o principle payment as it applies to interest payment u/s 24..!!!!