Income From House Property 1218216635017392 8

8/8/2019 Income From House Property 1218216635017392 8

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INCOME FROM HOUSE PROPERTY

House property for this purpose means :

Any building which has the characteristicfeatures of a building.

E.g.: residential building, cinema theatres

etc.


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INCOME FROM HOUSE

PROPERTY

Taxed on Notional Basis


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Conditions for taxing income under the head

house property.

There should be a building or a land

appurtenant there to .

ANDThe property should be owned by the

assessee.

ANDSuch building should not be used for own

business or profession.


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Section 22(Charing Section)

The Annual Value of building or land

appurtenant thereto is chargeable to tax in

the hands of the owner provided the sameis not used for own business or

profession.

E.g.: CASE 1: Mr. X lets out a HP to Mr. Y,

who intends to carry on his private

business. Income from HP.


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CASE 2: Mr. X uses his property to carry

on his own private business. No incomefrom HP.


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Exceptions to the rule that the rental

income is taxable under HP.

Income from sub letting Income from

OTHER SOURCES since the assessee is

not the owner.Composite rent When a building has

been let out along with the furniture , then

such letting out is called composite letting.

As per sec 56(2) , when the rent is

inseparable income from other sources.


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As per CIT vs. SHAMBHU INVESTMENTS

PVT. LTD., (2003) (s.c) such inseparable

composite rent is taxable under the head

HP.

At present Supreme Court decision has to

be followed.


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Section 23( Annual Value)

Sec 23(1)(a)

AV = Rent at which the HP is

reasonably expected to be let out.


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Sec 23( Annual Value)

Sec 23(1)(b)

If the house property is actually let

out and if rent received or receivable ishigher than the reasonable rent as per sec

23(1)(a), then such rent received or

receivable is taken as the ANNUAL

VALUE.


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Sec 23(1)(c)

If the property is actually let out and was

vacant during the year and rent receivedor receivable is lesser due to vacancy then

such lower rent shall be the annual value.


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Sec 23(2)

If a HP is self occupied .

ORIf a HP couldn't be occupied for

reasons of employment / profession

elsewhere.In such cases the AV= NIL.


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Sec 23(3)

Conditions for sec 23(2)-

Such HP shouldn't be let out duringany part of the year.

AND

No other income is derived from suchproperty.


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Sec 23(4)

If the assessee owns more than oneSec 23(2) property then:

AV of one HP at the option of theassessee is NIL.

AND

All the other HPs are Deemed LetOut Property [DLOP] and annual valuethereof is decided as per sec 23.


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Section 24 Deductions.

SEC 24(a)-Standard deductions @30% ofNAV only for let out property anddeemed let out property.

SEC 24(b)- interest on capital or loanborrowed for ACR3 (acquisition,construction, renewal ,repairs and

reconstruction) in respect of1. LOP/DLOP any amount is allowed

2. SOP Deductions is as follows:


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SOP Deductions

- Normal deductions up to

Rs 30000/-

- Special deduction up to

Rs 150000/-


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IMPORTANT NOTES

Interest deduction up to Rs 150000/-.It isavailable only for acquisition and construction.Provided:

(a) The loan taken on / after 01-04-1999.& construction completed within 3years from the end of the financial year in whichloan is borrowed.

(b) For claiming deductions interestcertificate & details of principal outstanding,interest amount etc. Along with return ofincome.


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Pre- Construction Period Interest

Allowed in five equal installments commencing

from the year of completion.

PCP means period commencing from the date of

loan or immediately preceding the March 31st ofthe year of completion which ever is earlier.


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Section 25( amounts not deductible)

Interest paid outside India without TDS orWithout having an arrangement for TDS in

India is disallowed.


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Section 25A( Unrealized rent recovered)

UR recovered is taxed in the year ofreceipt irrespective of whether assessee is

the owner or not of such property in the

year of such receipt . No deduction is

allowed against this income.


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Section 25B( Arrears of rent received)

It is taxable in the year of receipt irrespective of

whether assessee is the owner or not of such

property in the year of such receipt.

Deduction = 30%


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Section 26( Property owned by Co- Owners)

Share of co-owners definite,

ascertainable respective share is

taxable in the hands of the co owner.

Share of co-owners not definite,

ascertainable entire income is taxed

as the income of AOP.


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Important Points

Annual value of partly SO & partly vacant

Period based (i.e. 9 months

SOP & 3 months

vacant) = ANNUAL VALUE

= NIL

Usage based (i.e. 75%

used as SOP & 25% as

vacant) = ANNUAL VALUE

= 25% .


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Important Points

Annual value of partly SO & partly LO

Period based (i.e. 9 months

SOP & 3 months LOP)

Usage based (i.e. 75% used as

SOP & 25% as LOP)

Treated as DLOP for

entire period.AV of SOP NIL. AV of LOP to be

taken at 25%.


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Presented by :

Anirudh Prasad-05A078. Amrut .V.Katwa-05A077.

Income From House Property 1218216635017392 8

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