Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Tax exemption

25 February 2014

An individual has availed land loan from a bank. The interst certificate issued by the financier mentions the loan as Home Loan. But while availing the Land loan there was no condition put forth by the financier that he has to construct the house within the specified period.

Now the individual wants to claim tax beenfit on interest paid on the loan as Home loan. Though construction of house is not done. Lans purchased from the loan is taken only for investment purpose.

I am not in favour of him claimimg tax benefit as Home Loan. Kindly advice what should be done.

Reply
Follow
Share

4 Replies

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 26 February 2014

I think you can claim deduction based on certificate issued by the financer. Also risk will be on shoulder of client. Lets see other's view also.

Upgrade to CAclubindia Pro. Subscribe Now!

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 27 February 2014

Interest paid during the construction period is "Pre-Construction Interest" which can be claimed only from the year in which construction has been completed.In your case as construction is not completed no chance to get Interest deduction under the head "Income from House property" and one of the pre condition to tax an income under this head is there should be some Building(Super structure) to land appuarent to ,so unless you construct house,you can not claim benifit under this section.If you construct you can claim it.