Delay in possession of flat due to Stay by High Court
I had booked a flat with Kul Urban Limited in December 2010 and availed housing loan from LIC Housing Finance. However, there is a dispute between the builder and The State of Maharashtra and Bombay High Court has stayed further construction. As per my knowledge, the builder had obtained all the necessary permission. It is understood that the open area of the plot was earlier earmarked for garden but the same was later changed to Crematorium. Some purchasers approached High Court against this change of reservation. In response, the District Authorities withdrew the permission citing some irregularities of Urban Land Ceiling Act. As of now the High Court has stayed construction of both the Crematorium as well as the residential building. The buildings are 90% complete. I want to know whether I will be able to claim tax benefit on the interest paid on housing loan if the possession is given in 2014-16 and the property is let out. My understanding is that the three year limit and amount of Rs. 2,00,000 refers to self occupied property and hence I should be able claim tax benefit for the full amount of interest paid on the property let out. Kindly clarify and also suggest as to whether the interest payments can be offset against rental income in one year or can be spread in different years?