Redevelopment of House - Tax Treatment?
Facts:
I reside in a flat in Mumbai, India which is bought in my name, against a housing loan. Our housing society has received a proposal for redevelopment of the building where our flat will get demolished we shall get a new flat after 18-24 months construction period. In addition to some extra area the builder has offered us:
a) One time compensation for inconvenience caused calculated Rs. 400 for every square feet of existing carpet area
b) Rent compensation calculated as Rs. 30 per square feet per month (for the no of months we are displaced) to enable us to find temporary alternate accommodation for construction period.
c) Shifting expenses compensation Rs. 20,000/- as to take care of moving household items to the temporary alternate accommodation and back
Me and my wife are both employed and receive HRA as part of the compensation. We intend to take a flat on rent for the period in which the builder is going to complete our flat. We have certain queries in terms of tax treatment of such income:
Queries:
1. Can I continue to claim deduction for the interest on self occupied house property u/s 24 considering that the flat would be demolished?
2. What will be the tax treatment of the one time compensation I receive under a) above?
3. What will be the tax treatment of the rent compensation I receive under b) above if:
I) the rent paid by me exceeds rental received? Can I claim the excess as a deduction against HRA?
ii) the rent paid by me is less than rental received? Would the excess compensation received be subject to tax?
4. Similar to query no. 3. what will be the treatment of shifting expenses compensation in c) above?
