Dear Rishab,

You pointed out the correct provision that requires the very existence of property to claim 80C in respect of Housing Loan -

"the income from which is chargeable to tax under the head “Income from house 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"

Issue - Is completion of construction necessary ? 

Ans - Yes, since the condition is clear that either the property is let out otherwise it should be used for self residence.

Ur doubt - 80C has not specifically ruled out the payments made during construction.

Ans - I have a question - is it possible to fulfil the above condition when the property is under construction?

Now, how can u say that 80C has not explicitly acting against it? For me there is no doubt that benefit is not allowed during the period of construction.

Issue - Still many people are claiming it.........

"Grass on other side always looks greener"

True, but r u ready to take the risk of claiming a deduction against provisions? No one can answer this question except you - dont forget penalty for concealment - sec 271(1)(c) - 3 times the tax sought to be evaded in addition to tax and interest. 

Should u go for claiming it?

U may not like it but my piece of advice will be  No..Not at all.. Never

"Play safe"..............:)

According to me after reading all the above discussion i am able to find 2 questions:

1.  If we have taken the loan from a relative then interest u/s 24(b) will be allowed or not??

2. Does principal amount and stamp duty paid during the construction period will be allowed u/s 80C or not??

1. Deduction will be allowed u/s 24(b) as you all have discussed it. I just want to do addition as the interest inome will be taxable in the hands of relative thats why IT deptt will not have any problem in giving the deduction.

2. Deduction u/s 80C are allowed on payment basis. Moreover in clause (xviii) interpretation of the words "income under the head house property" are not  as you have derived. It is not saying that if house property is under consideration then these expenses will not be allowed. But it is saying that house property should be taxable u/s 22 and not in any other head like PGBP etc. But principal amount paid to relative will not be allowed as deduction.

if a loan is taken from related party it does not affect the treatment u/s 24(ii),but  the assesse has to obtain a written certificate from the person from whom the loan has  been taken.Since the house property is self occupied then the maximum ceiling  limit will be Rs 150000.

Thanks for the reply & placing your views Amir,

But i have the same doubt which Mr. Shudhanshu Agarwal is referring to: - the interpretation of the later part of the said section: -

the income from which is chargeable to tax under the head “Income from house 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—. . . . . . . .

This can also mean that the Taxman is saying that the exemption will be available to only those who will use the said property for Residential purpose and will not be available to those who intend to use the property for purpose other than House property.

Have anyone come across any ruling on this subject?

Dear Rishab,

There is no doubt from my side on whatever i have written here. So for me whatever i have written in clear and according to Act. Moreover, i have not found any contravercy on the above point.