Unit I & II will be covered under Income from House Property and Unit III will be covered under Profits of Gains of Business or Profession
Accordingly, interest for unit I & II will be allowed as deduction interest for Unit III will be added to cost of acquisition of building u/s 43.
Computation of deduction:-
Pre-construction period (1.4.2005 to 31.3.2009) 4 years
(5,00,000 * 12%) * 4 = Rs. 2,40,000/-
Assuming the three units to be of identical area, the amount of interest allocable to each unit is Rs. 80,000/-.
Accordingly, pre-construction period interest of Unit I & II will be allowed as deduction in 5 equal instalments begining from AY 10-11.
Interest for Unit III will be added to the cost of building.
Post Construction Period
Interest for Unit I, II & III will be allowed as deduction on actual basis
Computation of Income
Income under the head House Property
Unit I (Self Occupied)
GAV NIL
Less: Deduction u/s 24
(b) Interest on borrowed capital
Pre construction period (80,000/5) 16,000
For current year (5,00,000*12%)/3 20,000 36,000
Income (36,000)
Unit II (Let Out)
GAV (as calculated) XXXXX
(b) Interest on borrowed capital
Pre construction period (80,000/5) 16,000
For current year (5,00,000*12%)/3 20,000 36,000
Income
Income under the head PGBP
Net Profit
Less: Deduction u/s 36 (Interest) 20,000
Hope this solves your query. Do contact for any clarifications.