Calculate Income Tax on House Property

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY
TABLE OF CONTENTS
TABLE OF CASES............................................................................................................2
SYNOPSIS..........................................................................................................................3
INTRODUCTION..............................................................................................................4
CHAPTER 1 CHARGEABILITY UNDER INCOME TAX ACT, 1961........................5
ESSENTIALS OF SECTION 22....................................................................................5
CHAPER 2 DETERMINATION OF INCOME FROM HOUSE PROPERTY............13
GROSS ANNUAL VALUE OF THE HOUSE PROPERTY........................................13
DEDUCTIONS.............................................................................................................21
CHAPTER 3 MISCELLANEOUS PROVISION..........................................................30
BIBLIOGRAPHY.............................................................................................................37
BOOKS.........................................................................................................................37
WEBLINKS..................................................................................................................37
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TABLE OF CASES
Re: Authority for Advance Rulings v. Jasbir Singh Sarkaria, (2007) 164 Taxman
108 (AAR-New Delhi)..................................................................................................7
Amolak Ram Khosla v. CIT, (1981) 7 1TR 51 (SC)................................................14
CIT v. Amrit Lal Adlakha, (2007) II SOT 674 (Asr.) (SMC II)...............................24
CIT v. Chandenlal Maganlal, (2002) 120 Taxman 38 Guj......................................17
CIT v. Deepak Seth, (2005) 1 SOT 35 (Del).............................................................19
CIT v. Delhi Cloth and General Mills Ltd., (1966) 591 TR 152 (P&H)..................9
CIT v. Justice Avadh Bihari Rohatgi, (1981) 21 Taxman 409 (Del).......................20
CIT v. K. Srinivasan, (1972) 83 ITR 346-351............................................................4
CIT v. Master Sukhwant Singh, (2005) 196 CTR (P&H) 122................................23
CIT v. National Newsprint and Paper Mills, (1978)114 ITR 388 (MP)...................9
CIT v. Piccadily Hotels (P) Ltd., (2005) 97 1TD 564 (Chd.)...................................24
CIT v. Premnath Motors (P.) Ltd., (2007) 163 Taxman 383 (Raj)..........................24
Dr. Balbir Singh v. MCD, (1985) 152 ITR 388 (SC)................................................14
ITO v. Makrupa Chemical (P) Ltd., (2007) 12 SOT 68 (Mum).............................23
Premsudha Export (P.) Ltd v. CIT, (2007) 17 SOT 293 (Mum).............................16
Sheila Kaushish v. CIT, (1981) 7 ITR I (SC)............................................................14
Shew Kissen Bhatter v. CIT, (1973) 89 ITR 6.........................................................23
Sushma Rani Bonsai v. CIT, (2007) 165 Taxman 145 (Del) (Mag.)..........................7
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SYNOPSIS
Abstract
In the discussion to follow, the relevant provisions of the act relating to Income
from House Property would be considered and how the computation of income from this
source is to be made, namely, how the income is to be worked out and what are the
deductions to be given for computing the taxable income shall be explained. S. 22-27 of
the said act deal with the subject of taxation of income from house property.
Research Questions
1. What are the various provisions under the Income Tax Act, 1961 to deal with
the income from House Property?
2. What are the methods to calculate amount of tax to be paid under the head
Income from House Property?
Research Methodology
A descriptive and doctrinal research methodology was used for this project.
Concerned statute and books of renowned authors were looked into for the
compilation of the present study. Several websites were looked into for understanding
the concept of present study. Moreover various articles and case laws were referred
inorder to clear the law point at the present time. Referring to all the primary and
secondary material mentioned above, the present study has been compiled and
presented to the concerned.
Chapterisation Scheme
Chapter 1 Chargeability under the Income Tax Act, 1961
Chapter 2 Determination of Income from House Property
Chapter 3 Miscellaneous Provisions
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INTRODUCTION
S. 4 of the Income Tax Act, 1961 provides for charge of income tax. However,
this section by itself does not create any liability. It has been observed by the Supreme
Court in CIT v. K. Srinivasan,1 that although S. 4 is the charging section, yet income tax
can be charged only when the central act, which normally is the Finance Act, enacts that
income tax shall be charged for any assessment year at the rate or rates specified therein.
Every money receipt by a person is not chargeable to tax. S. 14 of the Income Tax
Act, 1961 specifies five heads of income on which tax can be imposed under the said act.
In order to be chargeable, an income has to be brought under one of these five heads. The
heads are:
i.
ii.
iii.
iv.
v.
Salaries
Income from House Property
Profits & Gains of business or profession
Capital Gains
Income from other sources
In the discussion to follow, the relevant provisions of the act relating to Income
from House Property would be considered and how the computation of income from this
source is to be made, namely, how the income is to be worked out and what are the
deductions to be given for computing the taxable income shall be explained. S. 22-27 of
the said act deal with the subject of taxation of income from house property.
1 (1972) 83 ITR 346-351

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CHAPTER 1 CHARGEABILITY UNDER INCOME TAX ACT,

1961
According to Section 22, the Annual value of house property consisting of
buildings or lands appurtenant thereto is chargeable to tax under this head if assessee is
owner of that house property and it is not used by the assessee for his own business or
profession.
Essentials of Section 22
Following are the essentials for property to be taxable under this head of income:
1.
THE PROPERTY SHOULD CONSIST OF BUILDING OR LAND
APPURTENANT THERETO
"Building" means a structure made up of any material (wood, mud, stones, bricks or
concrete) and which can be used as a dwelling house, store house, office, factory, music
hall, dance hall, lecture hall, theatre, stadium or swimming pool.
Important points:
A structure is building even if it is for temporary purpose.
Roof is not always essential for a structure to be a building as it depends upon the use
for which that structure is to be used. If it is to be used as stadium or swimming pool,
roof is not required whereas in other cases roof is important. Therefore, roof is essential
for a structure to be regarded as residential building and not for non-residential building.
An incomplete structure or structure in ruin without a roof or without doors can not be
called as building.
Lands appurtenant thereto: Appurtenant means attached to that building.
Therefore, any land which is attached to the building is also covered under Section 22.
The land attached to residential building may be in the form of path attaching that
building to the street, compounds, courtyards, backyards, playground, kitchen, garden,
motor garage, any parking space, stable, cattle shed, coach room, etc. However, the land
attached to non-residential building may be in the form of path/road connecting that
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building to the road, or connecting one department to other department, parking space,
playground for the benefit of the employee, etc. As, for the land to be covered under this
head of income it must be attached to the building therefore following incomes are not
covered under this head of income:
(1) Rent from vacant plot of land as there is no building but only land is there.
(2) Ground rent (rent of ground where building is constructed).
(3) Income from building sites, till building is built.
2. THE ASSESSEE SHOULD BE OWNER OF THE PROPERTY

Second condition for the property to be taxable under this head is that assessee
should be owner of the property. An owner does not
mean only a legal owner i.e.,
registered owner of the house property. However, it also includes a Deemed Owner.
Deemed Owner [Section 27]: Following persons are deemed to be owners of the
house property even though not legal/registered owner of the house property:
(1) Transfer of house property to Spouse or minor child [Section 27(1)]: if an
individual transfers the house property to his spouse or minor child without adequate
consideration then that individual (transferor) is deemed owner of that house property
i.e., Mr. A transfers house property worth Rs. 50,00,000 to Mrs. A without consideration
then Mr. A would be deemed owner of the house property.
Exceptions
(a)
In following cases if property is transferred to spouse then that individual
(transferor) is not deemed owner of that house property:

Where property is transferred under an agreement to live apart;
Where adequate (sufficient) consideration is given by the spouse (transferee).
(b) In following cases if property is transferred to the minor child then that individual
(transferor) is not deemed owner of that house property.
Where property is transferred to a married minor daughter;
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Where adequate (sufficient) consideration is given by the minor child.

Important Point: If inadequate consideration is given by the transferee then transferor
will be deemed owner of proportionate share i.e., Mr. A transfers house property worth
Rs. 50 Lac to Mrs. A and she transfers jewellery/shares worth Rs. 25 Lac then Mr. A
would be deemed owner of the 50% share of the house property.
(2) A holder of impartible estate [Section 27(ii)]: The Holder of impartible estate is
deemed owner of all the property in the estate. An impartible estate is a property which
cannot be divided and to which an assessee succeeds under law e.g.. since a temple
cannot be divided so any family member succeed to it under law is deemed owner of that
temple.
(3) A member of a company/co-operative society/A0Ps under House Building
Scheme [Section 27(iii)]: A member of a company/co-operative society/AOPs to whom
a or a part thereof is allotted or given on lease under House Building Scheme of that
company/co-operative society/AOPs is deemed owner of that house property.
(4) A person acquiring property under section 53A of the Transfer of Property Act
[Section 27(iv)]: A person who acquires actual physical possession of an immovable
property under section 53A of the Transfer of Property Act, 1882, is deemed owner of
that property even if it is not registered in his name. However, following conditions
should be fulfilled under section 53A of the Transfer of Property Act, 1882:
a) There should be a written agreement for the transfer of an immovable property
between buyer and seller.
b) The buyer should have paid a part of the consideration and should be ready to pay
remaining consideration. Here important fact is that the purchaser is ready to
make payment whenever the payment becomes due.2
c) The buyer should acquire actual physical possession of the property. It is enough
if transferee has, by virtue of that transaction, a right to enter upon and exercise
acts of possession effectively.3
2 Sushma Rani Bonsai v. CIT, (2007) 165 Taxman 145 (Del) (Mag.)
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(5) A Person having rights In a building under section 269 UA(f) of the Income-tax
Act [Section 27(v)]: If a person acquires a right in a building under section 269 UA(f) of
the Income-tax Act, 1961 then he is deemed owner of that house property. Section 269
UA(f) talks about lease for 12 years where the period of 12 years may be fixed initially
or after the extension.
Exceptions: In the following exceptional cases, Lessee would not be deemed owner of
the house property:
a)
If original lease period is less than one year.
b)
If original lease is from month to month.
EXAMPLES
(1) Mr. A, owner of a house property, gives that house property on lease to Mr. B for 20
years at lease rent of Rs 20,000 per month. Mr. B becomes deemed owner of the house
property.
(2) Mr. A, owner of a house property, gives that house property on lease to Mr. B for a
period of 6 years at lease rent of Rs 20,000 per month. Mr. B has a right to renew the
lease for further period of 6 years after the expiry of lease. As aggregate period of lease
is more than 12 years therefore, Mr. B becomes deemed owner of the house property.
period of 11 months at lease rent of Rs 20,000 per month. Mr. B has a right to renew the
lease for further period of 50 years after the expiry of 11 months. Though aggregate
period of lease is more than 12 years but original lease period is less than 12 months
therefore, Mr. B is not deemed owner of the house property.
period of one month at lease rent of Rs. 20,000 per month. Mr. B has a right to renew the
lease but every time it would be renewed for a period of one month for further period of
50 years. Though aggregate period of lease is more than 12 years but original lease is on
month to month therefore, Mr. B is not deemed owner of the house property.
3 Re: Authority for Advance Rulings v. Jasbir Singh Sarkaria, (2007)
164 Taxman 108 (AAR-New Delhi)
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Important points:
1. Income from subletting is not taxable under this Head of income as assessee (receiver
of rent) is not owner of the house property and it is taxable as either profit or gain of
business and profession or as 'income'.
2. If ownership is in dispute in the court of law then :
a) Any person, who receives rent of the house property as owner, in case property is
let out, would be assessee for tax under section 22.
b) Any person, who enjoys the possession of the house property as owner, in case
property is not let out, would be assessee for tax under section 22.
However, once matter is decided by the court then person declared by the court as
owner would be assessee for tax under section 22.
3. IT SHOULD NOT BE USED BY THE ASSESSEE FOR HIS OWN BUSINESS
OR PROFESSION.
For a house property to be taxable under this Head of income it should not be
used by the assessee for his own business or profession such as office, godown, factory,
music hall, dance hall, lecture hall, theatre, stadium or swimming pool. Therefore, if it is
used by assessee for himself then it should be used for residential purpose and if it is let
out then it can be used by the tenant for residential purpose or for business or profession
i.e., commercial purpose (office, godown, factory, music hall, dance once hall, lecture
hall, theatre, stadium or swimming pool).
Where residential quarters situated in the factory campus were given to
employees by the assessee at nominal rent of Rs.100/month, the purpose of letting of the
residential quarters is to run the business efficiently and smoothly. Therefore the
residential quarters will be treated as house property used by the assessee for his
business. Hence, annual value will not be chargeable to tax under this head of income
(under Section 22) and rent of Rs.100/month from workers is business income.4
Further, where a few rooms in the factory were let out by the company to
Government at nominal rent for locating a branch of' nationalized bank, post office,
4 CIT v. Delhi Cloth and General Mills Ltd., (1966) 591 TR 152 (P&H).
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police station, central excise office and railway station quarters for carrying on its
business efficiently and smoothly. It was held that as letting of was incidental to business
of the company therefore, annual value will not be chargeable to tax under this head of
income (under section 22) and rent is business income of the company.5
Important Points:
1) Income from house property is not taxable under this head of income (under
section 22): Income from house property is not taxable under this head of income in
the following cases:
a) If it is used by the assessee for his own business or profession i.e., commercial
purpose (office, godown, factory, music hall, dance hall, lecture hall. theatre,
stadium or swimming pool).
b) If it is let out by the assessee and letting of is incidental to business so that
assessee could run its business efficiently and smoothly.
2) Composite rent: Sometimes owner charges rent from tenant not only for the house
property but also as service charges/hire charges for various facilities/ plants,
machinery, etc. provided with the house. Such total rent is known as composite rent.
It can be of two types:
a) Composite rent which include rent for house property and service charges
for various facilities provided along with the house such as lift, gas, etc.:
Where rent is received by the assessee as rent for house property and also as
service charges for various facilities provided along with the house such as gas,
lift, water, electricity and ward, air conditioning, etc. then composite rent shall be
split up and part of the rent attributable to house property shall be income under
this head of income and remaining part of composite rent received for rendering
services shall be assessable as income from other sources.
b) Composite rent which Includes rent for house property and hire charges of
plant, etc.: Where rent is received by the assessee as rent for house property and
also as hire charges for plant, furniture and machinery belonging to owner then
composite rent may or may not be separable.
5 CIT v. National Newsprint and Paper Mills, (1978)114 ITR 388 (MP).
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i.
Where it is separable: Where letting of property is separable from letting of

other assets like plant, machinery and furniture and rent from house property
is separable from the hire charges for machinery, plant or furniture then rent
for house shall be taxable under this head and remaining composite rent (i.e.
hire charges) for plant, machinery and furniture would be taxable either under
head "Profit and Gains of Business or Profession" or "Income from Other
Sources".
ii.
Where it is not separable: Where letting of property is inseparable from

letting of other assets like plant, machinery and furniture and rent from house
property is not separable from the hire charges for machinery, plant or
furniture then whole composite rent shall be taxable either under head "Profit
and Gains of Business or Profession" or "Income from Other Sources" and
not under the head of "house property".
3) Income from house property in foreign country: Where assessee is resident or

resident and ordinarily resident in India and he has property in foreign country then
income from such house property from foreign country would be taxable in i the
hands of assessee. It is immaterial whether such income is brought into India or not.
However, if assessee is not resident in India or resident but not ordinarily resident in
India then income from house property situated in foreign country will be taxable in
India only where it is received in India during the previous year.
4) Income from house property is not taxable under this head of Income: In
following cases income from house property is not chargeable to tax:
(a) Farm House: Income from any building owned or occupied by an agriculturist or
receiver of rent or revenue of such land provided that:(i) Such building is situated in the agricultural land or the immediate vicinity of
agriculture land;
(ii)
Such building is used as a dwelling house or a store house or other out-
house.
(b) Property used by assessee for his own business or profession: Where house
property is used by assessee for his own business or profession then property shall be
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chargeable to tax under head "Profits or Gains from Business or Profession" and not
tinder this head of income.
(c) Self-occupied house property: Where house property is used by assessee for his
own residential purposes then annual value shall be nil.
(d) Property for charitable purposes: Where property is used for charitable religious
purposes then income from such property is exempted under section 11.
(e) Property of Registered Trade Union or Local authority: Where property is held
by registered trade union or local authority then income from such property is not
taxable.
(f) House Property (Palace) of ex-ruler: Where house property is owned by an exruler then annual value of that house property is not taxable.
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CHAPER 2 DETERMINATION OF INCOME FROM HOUSE

PROPERTY
Where above conditions are fulfilled then income from house property shall be
gross Annual Value minus deductions i.e,
Income from house property = Gross Annual Value - Deductions
GROSS ANNUAL VALUE OF THE HOUSE PROPERTY

For computing gross annual value, house property can be divided into two types:
(1) Let out House Property [LOHP] [Section 23(1)]
(2) Self Occupied Residential House Property [SORHP] [Section 23(2)]
Gross Annual Value of Let Out House Property [LOHP] [Section 23(1)]
In case of let out House Property [LOHP], gross annual value is,
(a) Reasonable expected rent
Or
(b) Actual rent received or receivable by the assessee,

whichever is higher provided section 23(1)(c) is not applicable.
However, section 23(1)(c) is applicable when Actual rent received or receivable by the
assessee is less than Reasonable expected rent due to vacancy.
(a) Reasonable expected rent is, whichever is higher of the following:

1
Municipal value
Fair rent
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Or
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1Municipal value: Municipal value is values as assessed by the local authority for
imposing municipal taxes.
2
Fair rent: Fair rent is rent of same or similar property situated in same or similar
locality. However, two properties can never be similar in every aspect but if property in
neighbourhood is comparable in some aspect to property in question then rent of such
property in neighbourhood will be considered to decide Reasonable expected rent.
The Supreme Court of India held that Reasonable expected rent cannot exceed standard
rent if Rent Control Act is applicable in that area. It means the standard rent is the
maximum amount of Reasonable expected rent.6 Therefore, Reasonable expected rent
is:
1 Municipal value
2 Fair rent
Or
Whichever is higher subject to the maximum of standard rent if Rent Control Act is
applicable.
(b) Actual rent received or receivable by the assessee (R): Actual rent received or
receivable by the assessee does not include unrealized rent (R2) and rent for the vacant
period (R3).
Therefore, R= R1 - R2 - R3.
Where,
R1 = Annual rent for the previous year for which property is let out
R2 = unrealized rent
R3 = rent for the vacant period.
Annual rent for the previous year for which property is let out (R1): "Annual rent
means:
6 Sheila Kaushish v. CIT, (1981) 7 ITR I (SC); Amolak Ram Khosla v. CIT,
(1981) 7 1TR 51 (SC); Dr. Balbir Singh v. MCD, (1985) 152 ITR 388 (SC)
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a) where the property is let throughout the year ending on the valuation date i.e., the
previous year, the actual rent received or receivable by the owner in respect of
such year;
b) where the property is let for only a part of the previous year, the amount which
bears the same proportion to the amount of actual rent received or receivable by
the owner for the period for which the property is let out as the period of twelve
months bears to the number of months (including part of a month) for which the
property is let out during the previous year.
Example 1: If property is let out @ Rs 5,000 pm then annual rent is Rs 60,000.
Example 2: A house property is let out for 6 months @ Rs 1000 p.m. and for 4 months
@ Rs 1,500 p.m. It remains vacant for the balance 2 months. The annual rent would be:
6 1000+4 1500
12=Rs 14,400
10
Unrealized rent (R2): Rent, which could not be realized by the owner (assessee) because
of some dispute with tenant, is known as unrealized rent. It is to be reduced from annual
rent if conditions laid down under Rule 4 of Income-tax Rules, 1962 are fulfilled:
(i)
If tenancy is bona fide.
(ii)
The tenant is not occupying any other property of the assessee.
(iii)
All the reasonable steps had been taken by the assessee to get the house property
vacated.
(iv)
All the reasonable steps had been taken by the assessee to institute legal
proceedings for recovery of rent and the Assessing Officer is satisfied that legal
proceedings would be useless.
Rent for the vacant period (R3): If the property remained vacant for some time during
the current previous year the rent of the vacant period is to be reduced from annual rent.
Example 1: If the property is let out for 12 months @ Rs 5,000 pm and the tenant
vacated the property after 10 months or property is let out for 10 months only. Then,
Actual rent received or receivable by the assessee (R) = R1 -R2-R3
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Annual Rent (R1) = Rs 60,000 (Rs 5,000 x 12)

Unrealised Rent (R2) = Nil as there is no unrealized rent
Rent for vacant period (R3) = 10,000 (Rs 5,000 x 2)
Therefore, R = Rs 60,000 Rs 10,000 = Rs 50,000
Example 2: A house property is let out for 6 months @ Rs 1,000 p.m. and for 4 months
@ Rs 1,500 p.m. It remains vacant for the balance 2 months.
Actual rent received or receivable by the assessee (R) = R1 -R2-R3
6 1000+4 1500
12=Rs 14,400
The annual rent (R1) =
10
Unrealized Rent (R2) = Nil
Rent for vacant period (R3) = Rs 2400/- i.e. (Rs 1200 x 2 as rent for one month is Rs
1200 i.e. 14,400/12)
Therefore, actual rent received or receivable = Rs 14,400
Rs 2,400/- = Rs 12,000
Important points:
1. When Actual rent received or receivable by the assessee is less than Reasonable
expected rent due to vacancy [Section 23(1)(c)]: If following conditions are fulfilled
then the Actual rent received or receivable by the assessee (R) would be Annual value of
the house property:
(i)The property is let out property but whole or any part of the property remained vacant
during the whole or any part of the previous year. It is not compulsory that the property
should be actually let out during the previous year, the intention to let out is important.
Therefore, if the property is held by the assessee for letting out and reasonable efforts are
made to find the tenant and assessee could not succeed in letting out then this condition
is fulfilled.
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The words 'property is let' in Section 23(1)(c) do not talk of actual letting out but
talk about intention to let out; if property is held by owner for letting out and efforts are
made to let it out, that property is covered by this clause.7
(ii)Actual rent received or receivable by the assessee is less than Reasonable expected
rent.
(iii)
This loss in the rent is only due to vacancy and not due to any other factor.
Where loss in rent is partly due to vacancy and partly due to other factors like
letting out the Property at lower rent or unrealized rent then mode of computation is not
provided in the Act and it is very clear that intention of the legislature is to give relief to
the assessee whose property remained vacant. Therefore, in such situation there are
following three possibilities:8
Possibilities
Gross Annual Value of Let Out House Property
1. When Actual rent received or receivable is less than Reasonable expected rent
only due to vacancy i.e.,
(b) Actual rent receivable by the assessee (R)
<
(a) Reasonable expected rent only due to vacancy
(b)Actual rent received or receivable by the assessee (R)
partly due to vacancy and partly due to other factors (letting out the property at
lower rent or unrealized rent) i.e.,
<
7 Premsudha Export (P.) Ltd v. CIT, (2007) 17 SOT 293 (Mum).
8 CIT v. Chandenlal Maganlal, (2002) 120 Taxman 38 Guj.
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(a) Reasonable expected rent only due to vacancy and partly due to other
factors (letting out the property at lower rent or unrealized rent)
(a) Reasonable
Loss due to vacancy
expected
rent
only due to factors other than vacancy factors (letting out the property at lower
rent or unrealized rent) i.e.,
<
(a) Reasonable expected rent only due to factors other than vacancy (letting out
the property at lower rent or unrealized rent)
(a) Reasonable expected rent
Gross Annual Value of Self Occupied Residential House Property [SORHP]

According to Section 23(2), where
(a) Property is used by assessee throughout the previous year for his (or family
member) own residential purpose;Or
(b) Such property could not be occupied by the assessee throughout the previous year
for his (or family member) own residential purpose because either due to
employment or business or profession assessee is residing at some other place
and no other benefit is derived from such property
Then Gross Annual Value would be Nil.
A house for residential purpose does not require a compulsory residence; it only
requires that house should be available for residential purpose of the assessee all the
time. Where the assessee has retained exclusive control over possession of a house
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owned by him, though he may not be actually present in the house and when he is away
from it, he is still in constructive possession of his residential house and as such he
cannot be denied the benefit under section 23(2)(a).9
Q) Can a vacant property be treated as Self-occupied House property?
A vacant property shall be treated as Self-occupied House property with Gross Annual
Value Nil if following conditions are fulfilled:
(i)
The assessee owns a house property.
(ii)
The said property could not be occupied by the assessee throughout the
previous year for his (or family member) own residential purpose because
either due to employment or business or profession assessee is residing at
some other place in a house property not owned by him.
(iii)
The said property is not let out for whole or part of the previous year.
(iv)
No other benefit is derived from such property.
Example: Mr. A owns a house in Chandigarh. During previous year 2009-10, he

was working in Delhi and was residing in a rented accommodation there. His house in
Chandigarh remained vacant throughout the previous year 2009-10 and he did not take
any other benefit from that house. As all the conditions laid down under section 23(2)(b)
are fulfilled therefore vacant house in Chandigarh is self-occupied house property.
However, where above conditions are not fulfilled then vacant house shall not be
treated as self-occupied property.
Example: Mr. A owns a house in Chandigarh. He is also working in Chandigarh
during previous year 2012-13. He was residing with his father in Chandigarh. Here
condition (ii) as mentioned under section 23(2) (b) is not fulfilled therefore the vacant
house shall not be treated as self-occupied house property.
9 CIT v. Deepak Seth, (2005) 1 SOT 35 (Del).

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Further Delhi High Court held that Section 23(2)(b) would apply to all those
cases where under the provisions of the Constitution, officials and dignitaries reside in
official residence instead of their own residence because of their office.10
Important points:
1) Only Individual or HUF can have the benefit of Section 23(2): Section 23(2) can be
applied if assessee is an individual or HUF as any other person like company,
partnership firm, AOPs/BOIs, Local Authority and any other artificial judicial person
cannot occupy the property for his (or family member) own residential purpose.
2) Where the house property is occupied for residential purposes not in the capacity
of the owner: If the house property is occupied for residential purposes not in the
capacity of the owner but as an employee then it will be let out house property and
Gross Annual Value will be determined according to Section 23(1). Where assessee
lets out his own house property to his employer-company which in turn was allotted
to assessee as rent free accommodation (perquisite). Assessee was not entitled for
benefit of Section 23(2) as he occupied the property not in the capacity of the owner
but as an employee therefore, it will be let out house property and Gross Annual
Value will be determined according to Section 23(1) [D. R. Sunder Raj v CIT (1979)
2 Taxman 458 (AP) ].
3) If more than one property is occupied by the assessee during previous year: If more
than one property is occupied by the assessee during previous year for residential
purpose then depending upon assessee's discretion one house property will be treated
as self-occupied house property and Gross Annual Value will be determined
according to Section 23(2) i.e., nil. However, remaining will be "Deemed to be Let
Out house property/s" and gross Annual Value will be determined according to
Section 23(1) i.e.,
(a) Reasonable expected rent; or
(b) Actual rent received or receivable by the assessee
whichever is higher. However, Section 23(1)(c) will not be applicable. As in such
situation actual rent received/receivable is nil. Therefore,
10 CIT v. Justice Avadh Bihari Rohatgi, (1981) 21 Taxman 409 (Del).
TAXATION LAW
Page 20
Gross Annual Value = Reasonable expected rent.

I.
Where property is partly Self Occupied and partly let out [Section 23(3)]: If
the house property consist of two or more independent residential units and
one or more units are occupied by the assessee for own residential purposes
and remaining units are let out then Gross Annual Value of:
(a)
(b)
the Let out units will be determined according to Section 23(1); and
the self-occupied units will be determined according to Section 23(2)
i.e., nil.
II.
Where property is Self-Occupied for the part of the previous year and let
out for remaining Previous year [Section 23(3)]: If the house property is
Self-Occupied for a part of the previous year and let out for the remaining
previous year then Gross Annual Value of the property:
(a) For the let out period will be determined according to Section 23(1); and
(b) for the self-occupied period will be determined according to Section 23(2)
i.e., nil.
DEDUCTIONS
1. Deductions regarding Let out House Property [LOHP]
2. Deductions regarding Self-Occupied Residential House Property [SORHP]
1. Deductions regarding Let Out House Property [LOHP]
From the Gross Annual Value as calculated under section 23(1) give following
deductions:
(a) Municipal taxes levied by local authority and paid by assessee [Proviso to Section
23] - Municipal taxes levied by local authority in respect of the house property will
be deducted if following conditions are fulfilled:
(i) these taxes are borne by the assessee; and
TAXATION LAW
Page 21
(ii) such taxes are actually paid by the assessee.
Important points:
I.
Municipal taxes include service tax also.
II.
No deduction can be claimed on payable basis but only on paid basis. Therefore,
Municipal taxes levied by local authority and not paid by assessee during
previous year are not deductible.
III.
Municipal taxes of past previous years paid by the assessee in current previous
year are deductible.
IV.
Where house property is situated outside India and Municipal taxes levied by
local authority of that foreign country and paid by assessee during previous year
then such Municipal taxes are also deductible.
V.
As municipal tax must be paid by assessee (landlord) therefore, Municipal taxes

levied by local authority and paid by tenant are not deductible.
Net Annual Value (NAV) = GAV - Municipal taxes
(b) Standard Deduction [Section 24(a)] - 30% of Net Annual Value is to be deducted
from Net Annual Value as Standard Deduction.
Important points:
I.
Standard deduction is given for expenditure incurred by the assessee in letting out
the house property.
II.
The actual expenditure incurred by the assessee is not important and amount of
standard deduction is fixed i.e. 30% of annual value.
(c) Interest on borrowed capital [Section 24(b)] - Where capital is borrowed by the
assessee for the purpose of purchase, reconstruction, repair, renovation or
TAXATION LAW
Page 22
construction of the house property and he is paying interest on such borrowed capital
then interest paid/payable during current previous year is allowed as deduction.
Important points:
I.
For claiming deduction there should be sufficient connection among borrowed

capital, interest and house property i.e., if borrowed capital is not spent on house
property but somewhere else then no deduction can be claimed under section
24(b).
II.
Deduction is allowed on annual interest even if interest is not paid/payable

annually i.e. interest is paid/payable monthly, quarterly or half-yearly.
III.
Deduction can be claimed on "accrual basis" and not on paid basis. Therefore,
where interest has become due during previous year but has not been paid by
assessee then he can claim deduction.
IV.
Interest is deductible without maximum ceiling. i.e. whatever amount is payable

as interest is allowed as deduction.
V.
Deduction is allowed even if neither principal nor interest is charged on property

i.e., whether it is unsecured or secured loan and whether any right/interest in the
property is given as security.
VI.
VII.
VIII.
Interest on unpaid interest is not allowed as deduction.11

Any brokerage or commission for arranging loan is not allowed as deduction.
Interest on fresh loan taken to repay earlier loan taken for such purpose is
allowed as deduction. In a recent case a question before Mumbai High Court was
that whether deduction can be claimed if first loan was interest free loan and
fresh loan is taken to repay it? The court answered it in affirmative.12
IX.
Where property is allotted by government [Estate Office] to assessee on

instalment basis and interest is payable on such instalment then there is
relationship of creditor and debtor between Estate Officer and assessee. Hence,
11 Shew Kissen Bhatter v. CIT, (1973) 89 ITR 6.

12 ITO v. Makrupa Chemical (P) Ltd., (2007) 12 SOT 68 (Mum).
TAXATION LAW
Page 23
such interest on instalment constitutes interest on capital borrowed under section

24(b) and allowed as deduction.13
X.
Such deduction will be allowed from the previous year when such purchase,
reconstruction, repair, renovation, or construction of the house property is
completed.
XI.
Payment to a municipal corporation for regularizing unauthorized construction is

not deductible.14
XII.
Amount spent by an assessee towards stamp duty for drawing up lease deed and
registration thereof, would not be deducted from rent received.15
XIII.
Deduction of interest under section 24(b) cannot be denied on the ground that
interest was paid on funds borrowed for acquisition of plot and not house
property, since in Section 24(b) the word 'property' is used and not the words
`house property'.16 Therefore, interest is deductible if capital is borrowed to
purchase a plot of land and not for the purpose of construction of building on it.
However, deduction can be claimed during previous year when construction of
house is complete.
XIV.
If capital is borrowed from outside India and interest is payable outside India no
deduction can be claimed if on such interest neither any tax is paid or deducted at
source nor recipient is having any representative/agent in India to pay tax on such
amount so received [Section 25].
(d) Interest of Pre-construction period [Explanation to Section 24] - Where capital is

borrowed by the assessee for the purpose of purchase or reconstruction of house
property then assessee can claim deduction relating to interest of Pre-construction
period. For this aggregate the interest of Pre-construction period and divide, it into
13 CIT v. Master Sukhwant Singh, (2005) 196 CTR (P&H) 122.
14 CIT v. Piccadily Hotels (P) Ltd., (2005) 97 1TD 564 (Chd.).
15 CIT v. Premnath Motors (P.) Ltd., (2007) 163 Taxman 383 (Raj).
16 CIT v. Amrit Lal Adlakha, (2007) II SOT 674 (Asr.) (SMC II).
TAXATION LAW
Page 24
five equal instalments and first instalment allowed as deduction in the previous year
in which house is acquired or construct is completed. Remaining four instalments
will be allowed as deduction in the four immediately succeeding previous years.
Q) What is Pre-construction Period?

Pre-construction Period means
period commencing on the date of borrowing capital; and
ending on:
(a) March 31 immediately preceding the date of completion of construction/ date
of acquisition
Or
(b) date of repayment of loan

Whichever is earlier
2. Deductions regarding Self Occupied House Property [SORHP]

The Gross Annual Value as calculated under section 23(2) is always nil. From GAV give
following deductions:
(a) Interest on borrowed capital [Sections24(b)] - Where capital is borrowed by the
assessee for the purpose of purchase, reconstruction, repair, renovation or
construction of the self-occupied house property and he is paying interest on such
borrowed capital then maximum amount of deduction regarding interest is Rs 30,000.
However, maximum amount of deduction is Rs 1,50,000 if following conditions are
fulfilled:
(i)
Capital is borrowed on or after April 1, 1999.
(ii) Capital is borrowed for acquisition and construction of a house property.
TAXATION LAW
Page 25
(iii)
The acquisition and construction is completed within three years from

the end of financial year in which capital was borrowed.
(iv) The certificate from the creditor must be attached with return of income that
interest is payable in respect of loan given for acquisition or construction of
house property or repayment of the principal amount outstanding under earlier
loan taken for such acquisition or construction of house property.
There is no condition of date of commencement of acquisition or construction of
house property it may have started before or after April 1, 1999. But capital must be
borrowed on or after April 1, 1999. Therefore, if above conditions are fulfilled maximum
deduction regarding interest would be Rs 1,50,000.
Amendment of section 24 by the Finance (No. 2) Act, 2014 [with effect from the 1st
day of April, 2015]: In section 24 (b), for the words "one lakh fifty thousand rupees". the
words "two lakh rupees" shall be substituted. Therefore, maximum deduction for house
loan interest in case of SOHP will be two lakh rupees instead of one lakh fifty thousand
rupees from the said date.
(b) Interest of Pre-construction period [Explanation to Section 24] - Where capital is
borrowed by the assessee for the purpose of purchase or reconstruction of house
property then assessee can claim deduction relating to interest of Pre-construction
period. For this aggregate the interest of Pre-construction period and divide, it into
five equal instalments and first instalment is allowed as deduction in the previous
year in which house is acquired or construction is completed. Remaining four
instalments will be allowed as deduction in the four immediately succeeding
assessment years. [same as in case of LOHP].
Example: Mr. A takes loan of Rs 4,00,000 @15% p.a. for construction of house on
June 10, 2004 and construction of the house is completed on January 15, 2010. Find the
deduction regarding interest if date of repayment is:
(i) January 16,2015 or
(ii) June 30, 2011 or
(iii)
TAXATION LAW
October 31, 2007.
Page 26
Solution:
(i) Date of repayment is January 16, 2015.
Therefore, Pre construction period is from June 10, 2004 March 31, 2009.
The interest from June 10, 2004 March 31, 2009 is Rs. 2,88,490 the single
annual instalment is Rs. 57.700 ( Rs 2,88,490/5)
Deduction
2009-2010
2010-211
2011-2012
2012-2013
2013-2014
2014-2015
regarding
Current
Rs 60,000
Rs 60,000
Rs 60,000
Rs 60,000
Rs 60,000
Rs 47,670
Rs 57,700
Rs 57,700
Rs 57,700
Rs 57,700
Rs 57,700
Nil
interest
Total
Rs
Rs
Rs
Rs
Rs
Rs 47,760
deduction
1,17,710
1,17,710
1,17,710
1,17,710
1,17,710
years
interest
Preconstruction
Period
(ii) Date of repayment is June 30, 2011.

Therefore, Pre-construction period is from June 10,2004 March 31,2009.
The interest from June 10, 2004 - March 31,2009 is Rs 2,88,490. The single
annual instalment is Rs 57,700 (Rs 2,88,490/5)
2009-2010
2010-211
2011-2012
2012-2013
2013-2014
2014-2015
Rs 60,000
Rs 60,000
Rs 14,790
Nil
Nil
Nil
Rs 57,700
Rs 57,700
Rs 57,700
Rs 57,700
Rs 57,700
Nil
Deduction
regarding
Current
years
interest
Preconstruction
Period
TAXATION LAW
Page 27
interest
Total
Rs
Rs
deduction
Rs 72,490
Rs 57,700
Rs 57,700
Nil
1,17,700
(iii)
Date of repayment is October 31, 2007.
Therefore, Pre-construction Period is from June 10, 2004 - October 31, 2007.
The interest from June 10, 2004 October 31, 2007 is Rs 2,03,150.
Therefore, the single annual instalment is Rs 40,700 (Rs 2,03,150/5).
Deduction
2009-2010
2010-211
2011-2012
2012-2013
2013-2014
2014-2015
regarding
Current
Nil
Nil
Nil
Nil
Nil
Nil
Rs 40,700
Rs 40,700
Rs 40,700
Rs 40,700
Rs 40,700
Nil
Rs 40,700
Rs 40,700
Rs 40,700
Rs 40,700
Rs 40,700
Nil
years
interest
Preconstruction
Period
interest
Total
deduction
DIFFERENCE IN DEDUCTIONS FOR LOHP AND SOHP

Self-Occupied Residential House
Let Out House Property [LOHP]
Property [SOHP]
(i) Municipal taxes levied by local

authority and paid by assessee
[Proviso to Section 23]
(ii) Standard Deduction Section 24
(a)
(iii)
Interest
on
(i)
Not allowed
(ii)
Not allowed
(iii)
Interest
on
borrowed
borrowed
capital [Sections 24(b)] -
capital [Sections 24(b)] - No
Maximum limit is Rs
maximum limit
30,000 or Rs 1,50,000 in
exceptional cases.
TAXATION LAW
Page 28
(iv)
(iv)Interest
of
Pre-construction
Interest
construction
Preperiod
period [Explanation to Section
[Explanation to Section
24]
24] - same as case in

LOHP
TAXATION LAW
of
Page 29
CHAPTER 3 MISCELLANEOUS PROVISION
1. WHERE UNREALIZED RENT IS REALIZED SUBSEQUENTLY [SECTIONS

25A AND 25AA]
(i)
Where unrealized rent was of the previous year 2000-2001 or of earlier

previous year and was realized in assessment year 2001-2002 or earlier
assessment year or where unrealized rent was allowed as deduction in
assessment year 2001-2002 or in earlier assessment year [Section 25A]:
Where under the earlier law assessee has claimed deduction regarding
unrealised rent in the assessment year 2001-2002 or in earlier assessment year
and assessee has realized any amount in respect of such rent during any
assessment year i.e., 2001-2002 or earlier assessment year i.e. 2000-01 and so
on then amount so realized would be "income from house property" of the
previous year in which it is realised.
Important points:
I.
Section 25A is applicable where unrealized rent is of the previous year

2000-2001 or of earlier previous year.
II.
III.
Assessee will not be eligible for any deduction under section 23 or 24.
The amount recovered would be taxable even if house is not owned by
the assessee in the year of recovery.
(ii)
Where unrealized rent was of the previous year 2001-2002 or of subsequent

previous year and was realized in assessment year 2002-2003 or subsequent
assessment year [Section 25AA]: Where assessee cannot realize the rent of
the previous year 2001-2002 or of subsequent previous year and was realized
in assessment year 2002-2003 or subsequent year then amount so realized
would be "income from house property" of the previous year in which it is
realized.
TAXATION LAW
Page 30
Important points:
I.
Section 25AA is applicable where unrealized rent is of the previous Year

2001-2002 or of subsequent previous year.
II.
The amount so realized should not be included in Gross Annual Value

earlier and should be deducted from Annual rent as unrealized rent (R2).
III.
If the amount so realized is already included in Gross Annual Value

earlier and was not deducted from Annual rent as unrealized rent (R2)
because conditions laid down in Rule 4 of Income-tax Rules, 1962 are
not fulfilled then Section 25AA will not be applicable. And assessee will
not be eligible for any deduction under section 23 or 24.
IV.
The amount recovered would be taxable even if house is not owned by

the assessee in the year of recovery.
2. ARREAR OF RENT RECEIVED IN CURRENT PREVIOUS YEAR

[SECTION 25B]
Where assessee is or was owner of house property consisting of buildings or lands
appurtenant thereto and receives any amount as arrears of rent in current previous year
then amount so received after giving standard deduction (30% of that amount) shall be
"income from House Property provided it was not charged to tax earlier.
Section 25B would be applicable even if assessee is not owner of the house property
in the current previous year in which rent is received.
Example: Mr. A owns a house property given on monthly rent of Rs 10,000 to a
company. Rent was increased on April 15, 2014 from Rs 10,000 to Rs 15,000 with
retrospective effect from April 1, 2013.
Solution: The arrears of rent of Rs 60,000 (Rs 5,000 12), of the previous year 20132014) received in the previous year 2014-15 would be "income from House Property"
after giving Standard deduction of 30%.
TAXATION LAW
Page 31
Arrears of rent received in the previous year 2014-15 = Rs 60,000

Standard deduction = Rs 18,000 (30/100 60,000)
Therefore, "income from House Property" during previous year 2014-15 under
section 25B = Rs 60,000 Rs 18,000 = Rs 42,000
This income is in addition to "income from house property" of current previous year
(2014-15) as calculated according to Section 23 after giving deduction under section
24.
3. HOUSE PROPERTY JOINTLY OWNED BY TWO OR MORE PERSONS

[SECTION 26]
Where two or more persons jointly own a house property consisting of buildings or
lands appurtenant thereto then such persons are known as co-owners. Further, where
respective shares of co-owners are:
(a) definite and ascertainable then such co-owners shall not be assessed as AOPs but
the proportionate share of each co-owner in the income from house property as
calculated in accordance with sections 22-25 shall be included in his Total
Income.
(b) not definite and ascertainable then each co-owner shall be deemed to have equal
share in the house property. Hence, proportionate share of each co-owner in the
income from house property as calculated in accordance with sections 22-25 shall
be included in his Total income.
Computation of income of Jointly owned House property:
(a) Where such jointly owned House property is let out house property then
annual value will be first determined according to Section 23(1) as if a
single person owns such property. Thereafter, income from house property
so calculated shall be distributed amongst each co-owner as per their
share (equal share in case their respective shares are not definite and
ascertainable and proportionate share In case their respective shares are
definite and ascertainable).
TAXATION LAW
Page 32
(b) Where such jointly owned House property is self-occupied house property
then annual value for each of such co-owner will be nil [Section 23 (2)].
But each of such co-owner is entitled to deduction of Rs 30,000 or Rs
1,50,000 (in exceptional cases) regarding annual interest for loan under
section 24(b)
Example 1: Mr. A, Mr. B and Mr. C, are co-owners of a house property and their shares
are definite and ascertainable i.e., Mr. A 50% share , Mr. B 25% and Mr. C 25%
share. The house property was constructed on December 15, 2008 and annual interest
payable for loan taken for construction is Rs 2,00,000.
The property is let-out house property with Gross Annual Value Rs
4,00,000.
Municipal taxes paid in current previous year is Rs 20,000.
Find out income under head Income from House property for Mr. A, Mr. B and Mr. C
Solution:
Net Annual value = Gross Annual Value Municipal taxes paid
= Rs 4,00,000 Rs 20,000
= Rs 3,80,000
(i)
Standard Deduction = Rs 1,14,000

[30% of Rs 3,80,000 = 30/100 Rs 3,80,000]
(ii)
Deduction regarding interest on loan taken for construction =

Rs2,00,000
Income from house property = Rs 66,000
[Rs 3,80,000 ( Rs 1,14,000 + Rs
2,00,000)]
Income from house property of Mr. A = 50% of Rs 66,000
= Rs 33,000
Income from house property of Mr. B = 25% of Rs 66,000
TAXATION LAW
Page 33
= Rs 16,500
Income from house property of Mr. C = 25% of Rs 66,000
= Rs 16,500
are not definite and ascertainable. The house property was constructed on December 15,
2008 and annual interest payable for loan taken for construction is Rs 2,00,000.
The property is let-out house property with
Gross Annual value Rs 4,00,000.
Municipal taxes paid in current previous year Rs 20,000
Find out income under the head Income from house property for Mr. A, Mr. B, and Mr.
C
Solution:
Net Annual value = Gross Annual Value Municipal taxes paid
= Rs 4,00,000 Rs 20,000
= Rs 3,80,000
(i)
Standard Deduction = Rs 1,14,000

[30% of Rs 3,80,000 = 30/100 Rs 3,80,000]
(ii)
Deduction regarding interest on loan taken for construction = Rs

2,00,000
Income from house property = Rs 66,000
[Rs 3,80,000 ( Rs 1,14,000 + Rs
2,00,000)]
Income from house property of Mr. A = 1/3 of Rs 66,000
= Rs 22,000
TAXATION LAW
Page 34
Income from house property of Mr. B = 1/3 of Rs 66,000

= Rs 22,000
Income from house property of Mr. C = 1/3 of Rs 66,000
= Rs 22,000
are definite and ascertainable i.e., Mr. A 50% share , Mr. B 25% and Mr. C 25%
share. The house property was constructed on December 15, 2008 and annual interest
payable for loan taken for construction is Rs 2,00,000. The property is self-occupied
house property with
Loan was taken on December 15, 2006
C
Solution:
Net Annual value = Nil
Deduction regarding interest on loan taken for construction = Rs 1,50,000
Income from house property = (-) Rs 1,50,000
Income from house property of Mr. A = 50% of (-) Rs 1,50,000
= (-) Rs 75,000
Income from house property of Mr. B = 25% of (-) Rs 1,50,000
= (-) Rs 37,500
Income from house property of Mr. C = 25% of (-) Rs 1,50,000
= (-) Rs 37,500
TAXATION LAW
Page 35
are not definite and ascertainable. The house property was constructed on December 15,
2008 and annual interest payable for loan taken for construction is Rs 2,00,000. The
property is self-occupied house property with
Loan was taken on December 15, 2006
C
Solution:
Net Annual value = Nil
Deduction regarding interest on loan taken for construction = Rs 1,50,000
Income from house property = (-) Rs 1,50,000
Income from house property of Mr. A = 1/3 of (-) Rs 1,50,000
= (-) Rs 50,000
Income from house property of Mr. B = 1/3 of (-) Rs 1,50,000
= (-) Rs 50,000
Income from house property of Mr. C = 1/3 of (-) Rs 1,50,000
= (-) Rs 50,000
Q) WHETHER INCOME FROM PROPERTY CAN BE IN LOSS?
Let-out house property: In such property there can be loss under head Income from
house property, if
(i) Municipal taxes paid in current previous year are more than Gross annual value
Or
(ii) Annual interest payable by assessee for loan taken for construction, acquisition,
repair, etc. is more than Net Annual Value.
TAXATION LAW
Page 36
Self-occupied house property: As in such cases annual value is always Nil. Therefore if
annual interest is payable by assessee for loan taken for construction, acquisition, repair,
etc. then income from house property is always negative.
TAXATION LAW
Page 37
BIBLIOGRAPHY
Books
RATTAN, JYOTI, Taxation Laws, 6th Ed., Bharat Law House, New Delhi, 2014.
Weblinks
http://www.incometaxindia.gov.in/_layouts/15/dit/mobile/faqs/faq-questions.aspx?
key=FAQs+on+Income+from+house+property&k=
http://www.business-standard.com/article/pf/how-to-calculate-tax-on-houseproperty-income-114031200127_1.html
http://blog.cleartax.in/section-24-deductions-house-property-income/
http://finotax.com/income-tax/info/house-property
http://www.moneycontrol.com/tax/property/deductions-allowed-under-incomehouseproperty_628453.html
http://www.charteredclub.com/income-from-house-property-deductions/
TAXATION LAW
Page 38

Calculate Income Tax on House Property

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PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

1 (1972) 83 ITR 346-351

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

CHAPTER 1 CHARGEABILITY UNDER INCOME TAX ACT,

THE PROPERTY SHOULD CONSIST OF BUILDING OR LAND

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

2. THE ASSESSEE SHOULD BE OWNER OF THE PROPERTY

mean only a legal owner i.e.,

In following cases if property is transferred to spouse then that individual

(transferor) is not deemed owner of that house property:

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

Where adequate (sufficient) consideration is given by the minor child.

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

If original lease period is less than one year.

If original lease is from month to month.

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

Where it is separable: Where letting of property is separable from letting of

Where it is not separable: Where letting of property is inseparable from

3) Income from house property in foreign country: Where assessee is resident or

Such building is used as a dwelling house or a store house or other out-

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

CHAPER 2 DETERMINATION OF INCOME FROM HOUSE

GROSS ANNUAL VALUE OF THE HOUSE PROPERTY

(b) Actual rent received or receivable by the assessee,

(a) Reasonable expected rent is, whichever is higher of the following:

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

If tenancy is bona fide.

The tenant is not occupying any other property of the assessee.

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

Annual Rent (R1) = Rs 60,000 (Rs 5,000 x 12)

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

Loss due to vacancy

Gross Annual Value of Self Occupied Residential House Property [SORHP]

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

The assessee owns a house property.

No other benefit is derived from such property.

Example: Mr. A owns a house in Chandigarh. During previous year 2009-10, he

9 CIT v. Deepak Seth, (2005) 1 SOT 35 (Del).

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

Gross Annual Value = Reasonable expected rent.

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

(ii) such taxes are actually paid by the assessee.

Municipal taxes include service tax also.

As municipal tax must be paid by assessee (landlord) therefore, Municipal taxes

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

For claiming deduction there should be sufficient connection among borrowed

Deduction is allowed on annual interest even if interest is not paid/payable

Interest is deductible without maximum ceiling. i.e. whatever amount is payable

Deduction is allowed even if neither principal nor interest is charged on property

Interest on unpaid interest is not allowed as deduction.11

Where property is allotted by government [Estate Office] to assessee on

11 Shew Kissen Bhatter v. CIT, (1973) 89 ITR 6.

PROJECT REPORT ON INCOME FROM HOUSE PROPERTY

such interest on instalment constitutes interest on capital borrowed under section