Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital 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 a 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;
Thus, if any interest is already claimed as deduction (i.e. expenditure) under any other section of I.T.act, it should be deducted from the total interest component and the rest alone should be allowed u/s 24(b).
For example, please refer to the following:
The interest on borrowed capital is an expenditure allowable as business expenditure if related to business of assessee. Since income from any kind of house property is chargeable to tax based on annual value of the property under the head of Income from house property, any interest on borrowed capital to acquire the samen should be claimed under the head H.P. u/s 24(b).
However, building occupied by any assess for the purpose of any business or profession by him is not chargeable to income tax under the head of H.P. Thus , if an asset is not taxable as H.P. no interest is deuctible u/s 24(b) in such cases.
THus, the interest on such type of borrowed capital would be claimed as business expenses of the assesse.
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