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Deduction 80C Housing Loan from Relatives

Auditor K.Sankar (Practitioner) (72 Points)

04 April 2011

My friend got a Loan amount of Rs.1.00 (One Lak) from his relative in the year of 2007 for purchase of residential plot and not paid interest till March 2010, Now he has paid Rs.96,000/- for past 4 Year Interet and Rs.1.00 paid for Principal. Now Can he calim deduction u/s.24 and u/s.80C. Please.

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8 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 04 April 2011

deduction under sec 24(2) is available but deduction u/s 80C is available for specified financial instutions only.

how ever he has used the funds for land only, not a residencial house, so no deduction is available unless its get converted to residencial house.

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Shriram Ramachandran (IPCC Student CWA Inter & Processing officer in GNSA Infotech Ltd) (492 Points)
Replied 04 April 2011

Hi K Shankar

Deductions from income from house property.

Sec 24:

Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—

(a) a sum equal to thirty per cent of the annual value;

(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:

Provided that in respect of property referred to in sub-section (2) of Section 23, the amount of deduction shall not exceed thirty thousand rupees :

Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed 39 [within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed one lakh fifty thousand rupees.

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:]

40 [Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan.

Explanation.—For the purposes of this proviso, the expression “new loan” means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.

Sec 80 C:

for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income fromhouse property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—

(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

(1) the Central Government or any State Government, or

(2) any bank, including a co-operative bank, or

(3) the Life Insurance Corporation, or

(4) the National Housing Bank, or

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36.

Thanks

R Shriram

CA SHRIPAL LUNIYA (CA, CS Final & M.Com) (744 Points)
Replied 04 April 2011

Yaa Interest deduction u/s 24(b) & House Loan Deduction u/s 80C both can be claim.

Here 80C Saction saying Payment of House Loan........nd u ra paying this in this F.Y. So deduction r allow.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 04 April 2011

Originally posted by : SHRIPAL LUNIYA
	Yaa Interest deduction u/s 24(b) & House Loan Deduction u/s 80C both can be claim. Here 80C Saction saying Payment of House Loan........nd u ra paying this in this F.Y. So deduction r allow.

Please read

/forum/analysis-of-housing-loan-sec-80c-and-24b--136402.asp

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!! Amol !! (PCC) (31 Points)
Replied 05 April 2011

Deduction U/s.24(b) not available unless & untill the TDS has been deducted on that interest amount.

However if the AO demands for Interest Certificate then Interest Certificate from relative is not acceptable by AO & he had a option to disallow the following Deduction.

The Act specifically says that the Loan is from Public Financial Institution & Other Bank!! The Relative is not come under this proviso.

I have already gone through this situation and same thing happend with me also as AO disallow my Deduction even though i Deducted the TDS on that Interest.

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CA.Naveen Kailkhuri (CA) (38 Points)
Replied 05 April 2011

Hi,

Deduction u/s 24(b) will not be allowed in your case as the said deduction is allowed only for the purpose of Purchase/Const/Repair/Renewal of the House Property. Section 24(b) can not be invoked or applied in case if only Land/ Plot is purchased.

Further, deuction u/s 80C will also not be available in your case as the loan was taken from an individual and not from the specified source.

Regards.