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I understand that the exemption in respect of leave travel allowance is available for two journeys performed in a block of four calendar years commencing from the calendar year 1986. I did not utilise the benefit of the exemption between 2002 and 2005. Can I claim the benefit of the exemptions not availed of, in the subsequent block from 2006 to 2009? If not, how is the value of travel to be reckoned for the exemption claimed in the block of four years from 2006 to 2009, which will relate to the block from 2002 to 2005? Manish Sijaria

Under Section 10(5), exemption can be claimed twice in a block of four calendar years commencing from the calendar year 1986. If you have not availed yourself of one or both of the exemptions available in the block of four calendar years from 2002 to 2005, you can in the subsequent block of four calendar years from 2006 to 2009 claim exemption under Section 10(5) in the first calendar year immediately succeeding the block of four calendar years, commencing from 2006. This exemption shall be in addition to that available in respect of two journeys for the succeeding block. The maximum amount that can be claimed as exemption will be subject to the limits prescribed. The limits that are prescribed are as shown in the Table.

There will be no change in the maximum amount that you can claim as exemption in 2006, in which year you can claim the exemption in addition to two more during the calendar years 2007 to 2009, since you did not claim any exemption in the calendar years 2002 to 2005.

I am a software professional. I purchased a flat in 2004 with a housing loan of Rs 14 lakh. I have not been living in this house but in another one also my own. There is no loan on the second house. In February, I moved into the flat. I am now showing this flat as self-occupied and claiming interest on capital and principal repayment as a deduction in computing my total income. I now propose to sell the old house and with the sale proceed repay the housing loan. Can I get tax benefits for using the proceeds from sale of the house for repaying the housing loan taken for purchase of the flat? Kiran

You cannot claim tax benefits on the capital gain arising from the house sale, the proceeds of which are to be used to repay the loan taken for the purchase of the flat. The I-T Act only allows exemption where there is a purchase or construction of another house under Section 54. No exemption is contemplated on repayment of a housing loan taken for acquiring another house property.

I constructed a house in 1996-97. The total cost of construction, including the cost of land, was Rs 10 lakh. I sold this house for Rs 13 lakh in March. Since the property is a long-term capital asset and taking into account the benefit of indexation, I will have a capital loss from the sale of the property. I intend purchasing a property in Pune. Since I have no capital gain, am I right in presuming that it will not be necessary to invest the money in a nationalised bank? Ganshyam Saxena

It is not necessary for you to make any investment in a nationalised bank, as you are not claiming exemption under Section 54 in respect of the house that you propose to purchase. Given that you have only incurred a loss on the sale of your old house, there will be no need for an exemption.

For claiming deduction under Section 80C in respect of the principal repayment of the housing loan is it necessary that the construction of the house be complete? I had taken a housing loan for construction of a house in 2005-06. The construction is likely to be completed only in 2006-07. I have started repaying the principal on the housing loan, even though the construction has not been completed. Will I be able to claim the benefit of Section 80C in the financial year 2005-06 in respect of the principal repayment of the housing loan in that year? Madhu P.R.

You can claim the deduction under Section 80C in respect of principal repayment only in the year of payment. Section 80C(2) specifically provides for allowing the deduction in respect of sums paid or deposited in the previous year.

In your case, the principal paid in the previous year, 2005-06, can be claimed only in that year.

This will be so even though the construction of the house will be completed only in the financial year 2006-07.

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