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INCOME FROM
HOUSE PROPERTY
SUBMITTED SUBMITTE D TO: Ms. Supreet Gill Sidhu
SUBIMTTED BY: Harkiran Singh Brar 87/10 IXth Semester Section B
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Acknowledgement I oe a great man! thanks to a great man! people ho helped and supported me during the riting o" this pro#ect. M! deepest thanks to m! $rinciples o" %a&ation %a&ation 'a( 'a( Ms. Supreet Supreet Gill Sidhu( Sidhu( the Guide o" the pro#ect "or guiding me and correcting )arious documents o" mine ith attention and care. She has taken pain to go through the pro#ect and make necessar! corrections as and hen needed. I ould also thank m! Institution and m! "acult! mem*ers ithout hom this pro#ect ould ha)e *een a distant realit!. I also e&tend m! heart"elt thanks to m! "amil! and ell+ishers.
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Income fom Ho!"e Po#et$ Sect%on" &&'&( ,ccording to Section --( the ,nnual )alue o" house propert ! consisting o" *uildings or lands appurtenant thereto is chargea*le to ta& under this head i" assessee is oner o" that house propert! and it is not used *! the assessee "or his on *usiness or pro"ession. ssentials o" Section -olloing are the essentials "or propert! to *e ta&a*le under this head o" income I. %he propert! should consist o" *uilding or land appurtenant thereto II. %he assessee should *e oner o" the propert! III. It should not *e used *! the assessee "or his on *usiness or pro"ession. The property should consist of building or land appurtenant thereto:
2B!%ld%ng2 means a structure made up o" an! material 3ood( mud( stones( *ricks or concrete4 and hich can *e used as a delling house( store house( o""ice( "actor!( music hall( dance hall( lecture hall( theatre( stadium or simming pool. Important points:
5 , structure is *uilding e)en i" it is "or temporar! purpose. 5 6oo" is not ala!s essential "or a structure to *e a *uilding as it depends upon the use "or hich that structure is to *e used. I" it is to *e used as stadium or simming pool( roo" is not reuired hereas in other cases roo" is important. %here"ore( roo" is essential "or a structure to *e regarded as residential *uilding and not "or non+residential *uilding. 5 ,n incomplete structure or structure in ruin ithout a roo" or ithout doors can not *e called as *uilding. “Lands appurtenant thereto”: ,ppurtenant means attached to that *uilding. %here"ore( an! land hich is attached to the *uilding is also co)ered under Section --. %he land attached to residential *uilding ma! *e in the "orm o" path attaching that *uilding to the street( compounds( court!ards( *ack!ards( pla!ground( kitchen( garden( motor garage( an! parking space( sta*le( cattle shed( coach room( etc. Hoe)er( the land attached to non+residential *uilding ma! *e in the "orm o" path/road connecting that *uilding to the road( or connecting one department to other department( parking space( pla!ground "or the *ene"it o" the
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emplo!ee( etc. ,s( "or the land to *e co)ered under this head o" income it must *e attached to the *uilding there"ore "olloing incomes are not co)ered under this head o" income 314 6ent "rom )acant plot o" land as there is no *uilding *ut onl! land is there. 3-4 Ground rent 3rent o" ground here *uilding is constructed4. 34 Income "rom *uilding sites( till *uilding is *uilt. The assessee should be owner of the property
Second condition "or the propert! to *e ta&a*le under this head is that assessee should *e oner o" the propert!. ,n oner does not mean onl! a legal oner i.e.( registered oner o" the house propert!. Hoe)er( it also includes a 9eemed :ner. Deemed Owner [Section !": olloing persons are deemed to *e oners o" the house propert! e)en though not legal/registered oner o" the house propert! #$% Transfer of house property to Spouse or minor child [Section !#$%": i" an indi)idual trans"ers the house propert! to his spouse or minor child ithout adeuate consideration then that indi)idual 3trans"eror4 is deemed oner o" that house propert! i.e.( Mr. , trans"ers house propert! orth 6s. ;0(00(000 to Mrs. , ithout consideration then Mr. , ould *e deemed oner o" the house propert!. &'ceptions
3a4 In "olloing cases i" propert! is trans"erred to spouse then that indi)idual 3trans"eror4 is not deemed oner o" that house propert! < =here propert! is trans"erred under an agreement to li)e apart < =here adeuate 3su""icient4 consideration is gi)en *! the spouse 3trans"eree4. 3*4 In "olloing cases i" propert! is trans"erred to the minor child then that indi)idual 3trans"eror4 is not deemed oner o" that house propert!. < =here propert! is trans"erred to a married minor daughter < =here adeuate 3su""icient4 consideration is gi)en *! the minor child. Important (oint: I" inadeuate consideration is gi)en *! the trans"eree then trans"eror ill *e deemed oner o" proportionate share i.e.( Mr. , trans"ers house propert! orth 6s. ;0 'ac to Mrs. , and she trans"ers #eeller!/shares orth 6s. -; 'ac then Mr. , ould *e deemed oner o" the ;0> share o" the house propert!. #% ) holder of impartible estate #Section !#ii%%: %he Holder o" imparti*le estate is deemed oner o" all the propert! in the estate. ,n imparti*le estate is a propert! hich cannot *e di)ided and to hich an assessee succeeds under la e.g.. since a temple cannot *e di)ided so an! "amil! mem*er succeed to it under la is deemed oner o" that temple.
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#*% ) member of a company+co,operati-e society+).(s under /ouse 0uilding Scheme #Section !#iii%%: ,+ mem*er o" a compan!/co+operati)e societ!/,:$s to hom a or a part thereo" is allotted or gi)en on lease under House Building Scheme o" that compan!/co+ operati)e societ!/,:$s is deemed oner o" that house propert!. #1% ) person ac2uiring property under section 3*) of the Transfer of (roperty )ct #Section !#i-%%: , person ho acuires actual ph!sical possession o" an immo)a*le propert! under section ;, o" the %rans"er o" $ropert! ,ct( 188-( is deemed oner o" that propert! e)en i" it is not registered in his name. Hoe)er( "olloing conditions should *e "ul"illed under section ;, o" the %rans"er o" $ropert! ,ct( 188- #i% %here should *e a ritten agreement "or the trans"er o" an immo)a*le propert! *eteen *u!er and seller. #ii% %he *u!er should ha)e paid a part o" the consideration and should *e read! to pa! remaining consideration. Here important "act is that the purchaser is read! to make pa!ment hene)er the pa!ment *ecomes due. ? Sushma 4ani 0onsai - 5IT )&**(+ ,-. T/0m/n ,1. )Del+ )M/g2+@. #iii% %he *u!er should acuire actual ph!sical possession o" the propert!. It is enough i" trans"eree has( *! )irtue o" that transaction( a right to enter upon and e&ercise acts o" possession e""ecti)el!( ?A!t3o%t$ fo Ad4/nce R!l%ng" 4 5/"6% S%ng3 S/k/%/7 In Re )&**(+ ,-1 T/0m/n ,*8 )AAR'New Del3%+ @. #3% ) (erson ha-ing rights In a building under section 67 8)#f% of the Income,ta' )ct #Section !#-%%: I" a person acuires a right in a *uilding under section -AC, (f) o" the Income+ta& ,ct( 1A1 then he is deemed oner o" that house propert!. Section -A C, (f) talks a*out lease "or 1- !ears here the period o" 1- !ears ma! *e "i&ed initiall! or a"ter the e&tension. &'ceptions: In the "olloing e&ceptional cases( 'essee ould not *e deemed oner o" the house propert!
(i) (ii)
I" original lease period is less than one !ear. I" original lease is "rom month to month.
&'amples
314 Mr. ,( oner o" a house propert!( gi)es that house propert! on lease to Mr. B "or -0 !ears at lease rent o" 6s -0(000 per month. Mr. B *ecomes deemed oner o" the house propert!. 3-4 Mr. ,( oner o" a house propert!( gi)es that house propert! on lease to Mr. B "or a period o" A !ears at lease rent o" 6s -0(000 per month. Mr. B has a right to rene the lease "or "urther period o" A !ears a"ter the e&pir! o" lease. ,s aggregate period o" lease is more than 1- !ears there"ore( Mr. B *ecomes deemed oner o" the house propert!.
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34 Mr. ,( oner o" a house propert!( gi)es that house propert! on lease to Mr. B "or a period o" 11 months at lease rent o" 6s -0(000 per month. Mr. B has a right to rene the lease "or "urther period o" ;0 !ears a"ter the e&pir! o" 11 months. %hough aggregate period o" lease is more than 1- !ears *ut original lease period is less than 1- months there"ore( Mr. B is not deemed oner o" the house propert!. 3D4 Mr. ,( oner o" a house propert!( gi)es that house propert! on lease to Mr. B "or a period o" one month at lease rent o" 6s. -0(000 per month. Mr. B has a right to rene the lease *ut e)er! time it ould *e reneed "or a period o" one month "or "urther period o" ;0 !ears. %hough aggregate period o" lease is more than 1- !ears *ut original lease is on month to month there"ore( Mr. B is not deemed oner o" the house propert!. Important points:
Income "rom su*letting is not ta&a*le under this Head o" income as assessee
3recei)er o" rent4 is not oner o" the house propert! and it is ta&a*le as either pro"it or gain o" *usiness and pro"ession or as EincomeE. I" onership is in dispute in the court o" la then 3a4 ,n! person( ho recei)es rent o" the house propert! as oner( in case propert! is let out( ould *e assessee "or ta& under section --. 3*4 ,n! person( ho en#o!s the possession o" the house propert! as oner( in case propert! is not let out( ould *e assessee "or ta& under section --. Hoe)er( once matter is decided *! the court then person declared *! the court as oner ould *e assessee "or ta& under section --. It should not be used by the assessee for his own business or profession
or a house propert! to *e ta&a*le under this Head o" income it should not *e used *! the assessee "or his on *usiness or pro"ession such as o""ice( godon( "actor!( music hall( dance hall( lecture hall( theatre( stadium or simming pool. %here"ore( i" it is used *! assessee "or himsel" then it should *e used "or residential purpose and i" it is let out then it can *e used *! the tenant "or residential purpose or "or *usiness or pro"ession i.e.( commercial purpose 3o""ice( godon( "actor!( music hall( dance once hall( lecture hall( theatre( stadium or simming pool4. =here residential uarters situated in the "actor! campus ere gi)en to emplo!ees *! the assessee at nominal rent o" 6s.100/month( the purpose o" letting o" the residential uarters is to run the *usiness e""icientl! and smoothl!. %here"ore the residential uarters ill *e treated as house propert! used *! the assessee "or his *usiness. Hence( annual )alue ill not *e chargea*le to ta& under this head o" income 3under Section --4 and rent o" 6s.100/month "rom orkers is *usiness income ? 5IT - Delhi 5loth and 9eneral ills Ltd ),9--+ .9, TR ,.& )PH+@. urther( here a "e rooms in the "actor! ere let out *! the compan! to Go)ernment at nominal rent "or locating a *ranch o"E nationaliFed *ank( post o""ice( police station( central
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e&cise o""ice and raila! station uarters "or carr!ing on its *usiness e""icientl! and smoothl!. It as held that as letting o" as incidental to *usiness o" the compan! there"ore( annual )alue ill not *e chargea*le to ta& under this head o" income 3under section --4 and rent is *usiness income o" the compan! ? 5IT - ;ational ;ewsprint and (aper ills ),9(8+,,1 ITR ;88 )MP+ @. Important (oints
Income from house property is not ta'able under this head of income #under section %: Income "rom house propert! is not ta&a*le under this head o" income in the "olloing cases
3a4 I" it is used *! the assessee "or his on *usiness or pro"ession i.e.( commercial purpose 3o""ice( godon( "actor!( music hall( dance hall( lecture hall. theatre( stadium or simming pool4. 3*4 I" it is let out *! the assessee and letting o" is incidental to *usiness so that assessee could run its *usiness e""icientl! and smoothl!.
5omposite rent: Sometimes oner charges rent "rom tenant not onl! "or the house
propert! *ut also as ser)ice charges/hire charges "or )arious "acilities/ plants( machiner!( etc. pro)ided ith the house. Such total rent is knon as composite rent. It can *e o" to t!pes #a% 5omposite rent which include rent for house property and ser-ice charges for -arious facilities pro-ided along with the house such as lift< gas< etc=: =here rent is recei)ed *! the assessee as rent "or house propert! and also as ser)ice charges "or )arious "acilities pro)ided along ith the house such as gas( li"t( ater( electricit! and ard( air conditioning( etc. then composite rent shall *e split up and part o" the rent attri*uta*le to house propert! shall *e income under this head o" income and remaining part o" composite rent recei)ed "or rendering ser)ices shall *e assessa*le as income "rom other sources. #b% 5omposite rent which Includes rent for house property and hire charges of plant< etc=: =here rent is recei)ed *! the assessee as rent "or house propert! and also as hire charges "or plant( "urniture and machiner! *elonging to oner then composite rent ma! or ma! not *e separa*le. 3i4 >here it is separable: =here letting o" propert! is separa*le "rom letting o" other assets like plant( machiner! and "urniture and rent "rom house propert! is separa*le "rom the hire charges "or machiner!( plant or "urniture then rent "or house shall *e ta&a*le under this head and remaining composite rent 3i.e. hire charges4 "or plant( machiner! and "urniture ould *e ta&a*le either under head 2$ro"it and Gains o" Business or $ro"ession2 or 2Income "rom :ther Sources2. #ii% >here it is not separable: =here letting o" propert! is insepara*le "rom letting o" other assets like plant( machiner! and "urniture and rent "rom house propert! is not separa*le "rom the hire charges "or machiner!( plant or "urniture then hole composite rent shall *e ta&a*le either under head 2$ro"it and Gains o" Business or
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$ro"ession2 or 2Income "rom :ther Sources2 and not under the head o" 2house propert!2. Income from house property in foreign country: =here assessee is resident or resident and ordinaril! resident in India and he has propert! in "oreign countr! then income "rom such house propert! "rom "oreign countr! ould *e ta&a*le in i the hands o" assessee. It is immaterial hether such income is *rought into India or not. Hoe)er( i" assessee is not resident in India or resident *ut not ordinaril! resident in India then income "rom house propert! situated in "oreign countr! ill *e ta&a*le in India onl! here it is recei)ed in India during the pre)ious !ear. Income from house property is not ta'able under this head of Income: In "olloing cases income "rom house propert! is not chargea*le to ta&
#a% ?arm /ouse: Income "rom an! *uilding oned or occupied *! an agriculturist or recei)er o" rent or re)enue o" such land pro)ided that+
3i4 such *uilding is situated in the agricultural land or the immediate )icinit! o" agriculture land and 3ii4 is used as a delling house or a store house or other out+house. #b% (roperty used by assessee for his own business or profession: =here house propert! is used *! assessee "or his on *usiness or pro"ession then propert! shall *e chargea*le to ta& under head 2$ro"its or Gains "rom Business or $ro"ession2 and not tinder this head o" income. #c% Self,occupied house property: =here house propert! is used *! assessee "or his on residential purposes then annual )alue shall *e nil. #d% (roperty for charitable purposes: =here propert! is used "or charita*le religious purposes then income "rom such propert! is e&empted under section 11. #e% (roperty of 4egistered Trade 8nion or Local authority: =here propert! is held *! registered trade union or local authorit! then income "rom such propert! is not ta&a*le. #f% /ouse (roperty #(alace% of e',ruler: =here house propert! is oned *! an e&+ruler then annual )alue o" that house propert! is not ta&a*le. Income from house property
=here a*o)e conditions are "ul"illed then income "rom house propert! shall *e gross ,nnual alue minus deductions e.g.( Income from house property @ 9ross )nnual Aalue , Deductions 9ross )nnual Aalue of the house property
or computing gross annual )alue( house propert! can *e di)ided into to t!pes
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314 'et :ut House $ropert! ?':H$@ ?Section -314@ 3-4 Sel" :ccupied 6esidential House $ropert! ?S:6H$@ ?Section -3-4@ 9ross )nnual Aalue of Let Out /ouse (roperty < LO/( = < Section *#$%=
In case o" let out House $ropert! ?':H$@( gross annual )alue is( 3a4 6easona*le e&pected rent :r 3*4 ,ctual rent recei)ed or recei)a*le *! the assessee( hiche)er is higher pro)ided section -3143c4 is not applica*le. Hoe)er( section -3143c4 is applica*le hen ,ctual rent recei)ed or recei)a*le *! the assessee is less than 6easona*le e&pected rent due to )acanc!. #a% 4easonable e'pected rent is )/+ ,
Municipal )alue :r
)/+ &
air rent =hiche)er is higher
)/+ , unicipal -alue: Municipal )alue is )alues as assessed *! the local authorit! "or imposing municipal ta&es. )/+ & ?air rent: air rent is rent o" same or similar propert! situated in same or similar localit!. Hoe)er( to properties can ne)er *e similar in e)er! aspect *ut i" propert! in neigh*orhood is compara*le in some aspect to propert! in uestion then rent o" such propert! in neigh*orhood ill *e considered to decide 6easona*le e&pected rent.
%he Supreme ourt o" India held that 6easona*le e&pected rent cannot e&ceed standard rent i" 6ent ontrol ,ct is applica*le in that area. It means the standard rent is the ma&imum amount o" 6easona*le e&pected rent. ? Sheila Baushish 4 5IT ),98,+ ( ITR I )SC+ @ )molaC 4am Bhosla 4 5IT ),98,+ ( ,TR ., )SC+ and Dr= 0albir Singh 4 5D ),98.+ ,.& ITR ;88 )SC+@.
%here"ore( Re/"on/6le e0#ected ent %" )/+ , Municipal )alue
:r
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)/+ & air rent
=hiche)er is higher su*#ect to the ma&imum o" standard rent i" 6ent ontrol ,ct is applica*le. #b% )ctual rent recei-ed or recei-able by the assessee #4%: ,ctual rent recei)ed or recei)a*le *! the assessee does not include unrealiFed rent 36-4 and rent "or the )acant period 364. %here"ore( 6J 6I + 6- + 6.
=here( 6I J ,nnual rent "or the pre)ious !ear "or hich propert! is let out 6- J unrealiFed rent 6J rent "or the )acant period. )nnual rent for the pre-ious year for which property is let out #4I%: 2,nnual rentK means 3a4 here the propert! is let throughout the !ear ending on the )aluation date i.e.( the pre)ious !ear( the actual rent recei)ed or recei)a*le *! the oner in respect o" such !ear
3*4 here the propert! is let "or onl! a part o" the pre)ious !ear( the amount hich *ears the same proportion to the amount o" actual rent recei)ed or recei)a*le *! the oner "or the period "or hich the propert! is let out as the period o" tel)e months *ears to the num*er o" months 3including part o" a month4 "or hich the propert! is let out during the pre)ious !ear. &'ample $: I" propert! is let out L 6s ;(000 pm then annual rent is 6s A0(000. &'ample : , house propert! is let out "or A months L 6s 1.000 p.m. and "or D months L 6s 1(;00 p.m. It remains )acant "or the *alance - months. %he annual rent ould 6 × 1000 + 4 × 1500
*e
10
× 12= Rs 14,400
8nrealied rent #4%: 6ent( hich could not *e realiFed *! the oner 3assessee4 *ecause o" some dispute ith tenant( is knon as unrealiFed rent. It is to *e reduced "rom annual rent i" conditions laid don under 6ule D o" Income+ta& 6ules( 1A- are "ul"illed
3i4 3ii4 3iii4 3i)4
I" tenanc! is *ona "ide. %he tenant is not occup!ing an! other propert! o" the assessee. ,ll the reasona*le steps had *een taken *! the assessee to get the house propert! )acated. ,ll the reasona*le steps had *een taken *! the assessee to institute legal proceedings "or reco)er! o" rent and the ,ssessing :""icer is satis"ied that legal proceedings ould *e useless.
4ent for the -acant period #4*%: I" the propert! remained )acant "or some time during the current pre)ious !ear the rent o" the )acant period is to *e reduced "rom annual rent.
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&'ample $: I" the propert! is let out "or 1- months L 6s ;(000 pm and the tenant )acated the propert! a"ter 10 months or propert! is let out "or 10 months onl!. %hen(
,ctual rent recei)ed or recei)a*le *! the assessee 364 J 6 I +6-+6 ,nnual 6ent 3614 J 6s A0(000 36s ;(000 & 1-4 Cnrealised 6ent 36-4 J il as there is no unrealiFed rent 6ent "or )acant period 364 J - 10(000 36s ;(000 & -4 %here"ore( 6 J 6s A0(000 6s 10(000 J 6s ;0(000 &'ample : , house propert! is let out "or A months L 6s 1(000 p.m. and "or D months L 6s 1(;00 p.m. It remains )acant "or the *alance - months.
,ctual rent recei)ed or recei)a*le *! the assessee 364 J 6I +6-+6 6 × 1000 + 4 × 1500
%he annual rent 3614 J
10
× 12= Rs 14,400
CnrealiFed 6ent 36-4 J il 6ent "or )acant period 364 J 6s -D00/+ i.e. 36s 1-00 & - as rent "or one month is 6s 1-00 i.e. 1D(D00/1-4 %here"ore( actual rent recei)ed or recei)a*le J 6s 1D(D00 −¿ 6s -(D00/+ J 6s 1-(000 >hen )ctual rent recei-ed or recei-able by the assessee is less than 4easonable e'pected rent due to -acancy [Section *#I%#c%": I" "olloing conditions are "ul"illed then the ,ctual rent recei)ed or recei)a*le *! the assessee 364 ould *e ,nnual )alue o" the house propert! 3i4 %he propert! is let out propert! *ut hole or an! part o" the propert! remained )acant during the hole or an! part o" the pre)ious !ear. It is not compulsor! that the propert! should *e actuall! let out during the pre)ious !ear( the intention to let out is important. %here"ore( i" the propert! is held *! the assessee "or letting out and reasona*le e""orts are made to "ind the tenant and assessee could not succeed in letting out then this condition is "ul"illed.
%he ords Epropert! is letE in Section -3143c4 do not talk o" actual letting out *ut talk a*out intention to let out i" propert! is held *! oner "or letting out and e""orts are made to let it out( that propert! is co)ered *! this clause ? (remsudha &'port #(=% >td 4 5IT )&**(+ ,( SOT &9; )M!m+@. 3ii4 ,ctual rent recei)ed or recei)a*le *! the assessee is less than 6easona*le e&pected rent. 3iii4%his loss in the rent is onl! due to )acanc! and not due to an! other "actor.
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=here loss in rent is partl! due to )acanc! and partl! due to other "actors like letting out the $ropert! at loer rent or unrealiFed rent then mode o" computation is not pro)ided in the ,ct and it is )er! clear that intention o" the legislature is to gi)e relie" to the assessee hose propert! remained )acant. %here"ore( in such situation there are "olloing three possi*ilities ?5IT 4 5handenlal aganlal )&**&+ ,&* T/0m/n ;8 ?!@ @ Po""%6%l%t%e" ?o"" Ann!/l /l!e of >et O!t Ho!"e Po#et$
1. =hen ,ctual rent recei)ed or recei)a*le is less than 6easona*le e&pected rent onl! due to )acanc! i.e.( )6+ Act!/l ent ece%4/6le 6$ t3e /""e""ee )R+ )/+ Re/"on/6le e0#ected ent onl! due to )acanc! 3*4,ctual rent recei)ed or recei)a*le *! the assessee 364 -. =hen ,ctual rent recei)ed or recei)a*le is less than 6easona*le e&pected rent partl! due to )acanc! and partl! due to other "actors 3letting out the propert! at loer rent or unrealiFed rent4 i.e.( )6+ Act!/l ent ece%4/6le 6$ t3e /""e""ee )R+ N )/+ Re/"on/6le e0#ected ent onl! due to )acanc! and partl! due to other "actors 3letting out the propert! at loer rent or unrealiFed rent4
(a) 6easona*le
'oss due to )acanc!
e&pected O rent . =hen ,ctual rent recei)ed or recei)a*le is less than 6easona*le e&pected rent onl! due to "actors other than )acanc! "actors 3letting out the propert! at loer rent or unrealiFed rent4 i.e.( )6+ Act!/l ent ece%4/6le 6$ t3e /""e""ee )R+ N )/+ Re/"on/6le e0#ected ent onl! due to "actors other than )acanc! 3letting out the propert! at loer rent or unrealiFed rent4 3a4 6easona*le e&pected rent
6==b 9ross )nnual Aalue of Self Occupied 4esidential /ouse (roperty < SO4/( = < Section *#%=:
=here
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3a4 $ropert! is used *! assessee throughout the pre)ious !ear "or his 3or "amil! mem*er4 on residential purpose :r 3*4 Such propert! could not *e occupied *! the assessee throughout the pre)ious !ear "or his 3or "amil! mem*er4 on residential purpose *ecause either due to emplo!ment or *usiness or pro"ession assessee is residing at some other place and no other *ene"it is deri)ed "rom such propert! %hen Gross ,nnual alue ould *e il. , house "or residential purpose does not reuire a compulsor! residence it onl! reuires that house should *e a)aila*le "or residential purpose o" the assessee all the time. =here the assessee has retained e&clusi)e control o)er possession o" a house oned *! him( though he ma! not *e actuall! present in the house and hen he is aa! "rom it( he is still in constructi)e possession o" his residential house and as such he cannot *e denied the *ene"it under section -3-43a4. ?5IT 4 DeepaC Seth )&**.+ , SOT ;. )Del+ @. 5an a -acant property be treated as Self,occupied /ouse propertyE
, )acant propert! shall *e treated as Sel"+occupied House propert! ith Gross ,nnual alue il i" "olloing conditions are "ul"illed 3i4 3ii4
3iii4 3i)4
%he assessee ons a house propert!. %he said propert! could not *e occupied *! the assessee throughout the pre)ious !ear "or his 3or "amil! mem*er4 on residential purpose *ecause either due to emplo!ment or *usiness or pro"ession assessee is residing at some other place in a house propert! not oned *! him. %he said propert! is not let out "or hole or part o" the pre)ious !ear. o other *ene"it is deri)ed "rom such propert!.
&'ample: Mr. , ons a house in handigarh. 9uring pre)ious !ear -00+10( he as orking in 9elhi and as residing in a rented accommodation there. His house in handigarh remained )acant throughout the pre)ious !ear -00+10 and he did not take an! other *ene"it "rom that house. ,s all the conditions laid don under section -3-43*4 are "ul"illed there"ore )acant house in handigarh is sel"+occupied house propert!.
Hoe)er( here a*o)e conditions are not "ul"illed then )acant house shall not *e treated as sel"+occupied propert!. &'ample: Mr. , ons a house in handigarh. He is also orking in handigarh during pre)ious !ear -01-+1. He as residing ith his "ather in handigarh. Here condition 3ii4 as mentioned under section -3-4 3*4 is not "ul"illed there"ore the )acant house shall not *e treated as sel"+occupied house propert!.
urther 9elhi High ourt held that Section -3-43*4 ould appl! to all those cases here under the pro)isions o" the onstitution( o""icials and dignitaries reside in o""icial
I nc o meT a xAc t ,1 96 1
14
residence instead o" their on residence *ecause o" their o""ice ?5IT 4 Fustice )-adh 0ihari 4ohatgi ),98,+ &, T/0m/n 1*9 )Del+ @. Important points:
Only Indi-idual or /8? can ha-e the benefit of Section *#%: Section -3-4 can *e
applied i" assessee is an indi)idual or HC as an! other person like compan!( partnership "irm( ,:$s/B:Is( 'ocal ,uthorit! and an! other arti"icial #udicial person cannot occup! the propert! "or his 3or "amil! mem*er4 on residential purpose. >here the house property is occupied for residential purposes not in the capacity of the owner: I" the house propert! is occupied "or residential purposes not in the capacit! o" the oner *ut as an emplo!ee then it ill *e let out house propert! and Gross ,nnual alue ill *e determined according to Section -314. =here assessee lets out his on house propert! to his emplo!er+compan! hich in turn as allotted to assessee as rent "ree accommodation 3peruisite4. ,ssessee as not entitled "or *ene"it o" Section -3-4 as he occupied the propert! not in the capacit! o" the oner *ut as an emplo!ee there"ore( it ill *e let out house propert! and Gross ,nnual alue ill *e determined according to Section -314 ? D= 4= Sunder 4aG 4 5IT ),9(9+ & T/0m/n 1.8 )AP+ @. If more than one property is occupied by the assessee during pre-ious year: I" more
than one propert! is occupied *! the assessee during pre)ious !ear "or residential purpose then depending upon assesseeEs discretion one house propert! ill *e treated as sel"+occupied house propert! and Gross ,nnual alue ill *e determined according to Section -3-4 i.e.( nil. Hoe)er( remaining ill *e 29eemed to *e 'et :ut house propert!/s2 and gross ,nnual alue ill *e determined according to Section -314 i.e.( 3a4 6easona*le e&pected rent or 3*4 ,ctual rent recei)ed or recei)a*le *! the assessee hiche)er is higher. Hoe)er( Section -3143c4 ill not *e applica*le. ,s in such situation actual rent recei)ed/recei)a*le is nil. %here"ore( Gross ,nnual alue J 6easona*le e&pected rent.
>here property is partly Self Occupied and partly let out [Section *#*%": I"
the house propert! consist o" to or more independent residential units and one or more units are occupied *! the assessee "or on residential purposes and remaining units are let out then Gross ,nnual alue o" 3a4 the 'et out units ill *e determined according to Section -314 and 3*4 the sel"+occupied units ill *e determined according to Section -3-4 i.e.( nil. >here property is Self,Occupied for the part of the pre-ious year and let out for remaining (re-ious year [Section *#*%": I" the house propert! is Sel"+ :ccupied "or a part o" the pre)ious !ear and let out "or the remaining pre)ious !ear then Gross ,nnual alue o" the propert!
I nc o meT a xAc t ,1 96 1
15
3a4 or the let out period ill *e determined according to Section -314 and 3*4 "or the sel"+occupied period ill *e determined according to Section -3-4 i.e.( nil. Ded!ct%on"
1. 9eductions regarding 'et :ut House $ropert! ?':H$@ -. 9eductions regarding Sel"+:ccupied 6esidential House $ropert! ?S:6H$@ Deductions regarding Let Out /ouse (roperty [LO/("
rom the Gross ,nnual alue as calculated under section -314 gi)e "olloing deductions n Municipal taxes levied by local authority and paid by assessee [Proviso to Section 23] Municipal ta&es le)ied *! local authorit! in respect o" the house propert! ill *e deducted i" "olloing conditions are "ul"illed 3i4 these ta&es arc *orne *! the assessee and 3ii4 such ta&es are actuall! paid *! the assessee. Important points:
Municipal ta&es include ser)ice ta& also. o deduction can *e claimed on pa!a*le *asis *ut onl! on paid *asis. %here"ore( Municipal ta&es le)ied *! local authorit! and not paid *! assessee during pre)ious !ear are not deducti*le. Municipal ta&es o" past pre)ious !ears paid *! the assessee in current pre)ious !ear are deducti*le. =here house propert! is situated outside India and Municipal ta&es le)ied *! local authorit! o" that "oreign countr! and paid *! assessee during pre)ious !ear then such Municipal ta&es are also deducti*le. ,s municipal ta& must *e paid *! assessee 3landlord4 there"ore( Municipal ta&es le)ied *! local authorit! and paid *! tenant are not deducti*le. ;et )nnual Aalue #;)A% @ 9)A , unicipal ta'es Standard Deduction [Section 24(a)] 0> o" et ,nnual alue is to *e deducted "rom et ,nnual alue as Standard 9eduction. Important points:
Standard deduction is gi)en "or e&penditure incurred *! the assessee in letting out the
house propert!. %he actual e&penditure incurred *! the assessee is not important and amount o" standard deduction is "i&ed i.e. 0> o" annual )alue.
I nc o meT a xAc t ,1 96 1
16
nterest on borro!ed capital [Section 24(b)] =here capital is *orroed *! the assessee "or the purpose o" purchase( reconstruction( repair( reno)ation or construction o" the house propert! and he is pa!ing interest on such *orroed capital then interest paid/pa!a*le during current pre)ious !ear is alloed as deduction. Important points:
or claiming deduction there should *e su""icient connection among *orroed capital(
interest and house propert! i.e.( i" *orroed capital is not spent on house propert! *ut somehere else then no deduction can *e claimed under section -D3 b4. 9eduction is alloed on annual interest e)en i" interest is not paid/pa!a*le annuall! i.e. interest is paid/pa!a*le monthl!( uarterl! or hal"+!earl!. 9eduction can *e claimed on 2accrual *asis2 and not on paid *asis. %here"ore( here interest has *ecome due during pre)ious !ear *ut has not *een paid *! assessee then he can claim deduction. Interest is deducti*le ithout ma&imum ceiling. i.e. hate)er amount is pa!a*le as interest is alloed as deduction. 9eduction is alloed e)en i" neither principal nor interest is charged on propert! i.e.( hether it is unsecured or secured loan and hether an! right/interest in the propert! is gi)en as securit!. Interest on unpaid interest is not alloed as deduction ? Shew Bissen 0hatter - 5$T ),9(;+ 89 ITR - @. ,n! *rokerage or commission "or arranging loan is not alloed as deduction. Interest on "resh loan taken to repa! earlier loan taken "or such purpose is alloed as
deduction. In a recent case a uestion *e"ore Mum*ai High ourt as that hether deduction can *e claimed i" "irst loan as interest "ree loan and "resh loan is taken to repa! itP %he court ansered it in a""irmati)e. ? ITO - aCrupa 5hemical #(% Ltd= )&**(+ ,& SOT -8 )M!m+ @ =here propert! is allotted *! go)ernment ?state :""ice@ to assessee on instalment *asis and interest is pa!a*le on such instalment then there is relationship o" creditor and de*tor *eteen state :""icer and assessee. Hence( such interest on instalment constitutes interest on capital *orroed under section -D3*4 and alloed as deduction. ?5IT - aster SuChwant Singh )&**.+ ,9- CTR )PH+ ,&& @. Such deduction ill *e alloed "rom the pre)ious !ear hen such purchase( reconstruction( repair( reno)ation( or construction o" the house propert! is completed. $a!ment to a municipal corporation "or regulariFing unauthoriFed construction is not deducti*le( ?5IT - (iccadily /otels #(% Ltd= )&**.+ 9( ,TD .-1 )C3d2+ @. ,mount spent *! an assessee toards stamp dut! "or draing up lease deed and registration thereo"( ould not *e deducted "rom rent recei)ed( ? 5IT - (remnath otors #(=% Ltd= )&**(+ ,-; T/0m/n ;8; )R/@+ @ 9eduction o" interest under section -D3*4 cannot *e denied on the ground that interest as paid on "unds *orroed "or acuisition o" plot and not house propert!( since in Section -D3*4 the ord Epropert!E is used and not the ords Qhouse propert!E( ? 5IT -
I nc o meT a xAc t ,1 96 1
17
)mrit Lal )dlaCha )&**(+ II SOT -(1 )A"2+ )SMC II+ @. %here"ore( interest is deducti*le i" capital is *orroed to purchase a plot o" land and not "or the purpose o" construction o" *uilding on it. Hoe)er( deduction can *e claimed during pre)ious !ear hen construction o" house is complete. I" capital is *orroed "rom outside India and interest is pa!a*le outside India no
deduction can *e claimed i" on such interest neither an! ta& is paid or deducted at source nor recipient is ha)ing an! representati)e/agent in India to pa! ta& on such amount so recei)ed ?Section -;@. nterest of Pre"construction period [#xplanation to Section 24] =here capital is *orroed *! the assessee "or the purpose o" purchase or reconstruction o" house propert! then assessee can claim deduction relating to interest o" $re+construction period. or this aggregate the interest o" $re+construction period and di)ide( it into "i)e eual instalments and "irst instalment alloed as deduction in the pre)ious !ear in hich house is acuired or construct is completed. 6emaining "our instalments ill *e alloed as deduction in the "our immediatel! succeeding pre)ious !ears. >hat is (re,construction (eriodE
$re+construction $eriod means O O
period commencing on the date o" *orroing capital and ending on 3a4 March 1 immediatel! preceding the date o" completion o" construction/ date o" acuisition or 3*4 date o" repa!ment o" loan =hiche)er is earlier
Deductions regarding Self occupied /ouse (roperty [SO4/("
%he Gross ,nnual alue as calculated under section -3-4 is ala!s nil. rom G, gi)e "olloing deductions nterest on borro!ed capital [Sections24(b)] =here capital is *orroed *! the assessee "or the purpose o" purchase( reconstruction( repair( reno)ation or construction o" the sel"+occupied house propert! and he is pa!ing interest on such *orroed capital then ma&imum amount o" deduction regarding interest is 6s 0(000. Hoe)er( ma&imum amount o" deduction is 6s 1(;0(000 i" "olloing conditions ar e "ul"illed (i) apital is *orroed on or a"ter ,pril 1( 1. (ii) apital is *orroed "or acuisition and construction o" a house propert!.
I nc o meT a xAc t ,1 96 1
18
(iii)
%he acuisition and construction is completed ithin three !ears "rom the end o" "inancial !ear in hich capital as *orroed. (iv) %he certi"icate "rom the creditor must *e attached ith return o" income that interest is pa!a*le in respect o" loan gi)en "or acuisition or construction • o" house propert! or repa!ment o" the principal amount outstanding under earlier loan taken "or such acuisition or construction o" house propert!. %here is no condition o" date o" commencement o" acuisition or construction o" house propert! it ma! ha)e started *e"ore or a"ter ,pril 1( 1. But capital must *e *orroed on or a"ter ,pril 1( 1. %here"ore( i" a*o)e conditions are "ul"illed ma&imum deduction regarding interest ould *e 6s 1(;0(000. )mendment of section 1 by the ?inance #;o= % )ct< .$1 [with effect from the $st day of )pril< .$3": n section 24 (b)$ for the !ords %one la&h fifty thousand rupees%' the !ords %t!o la&h rupees% shall be substituted' herefore$ axiu deduction for house loan interest in case of S*+P !ill be t!o la&h rupees instead of one la&h fifty thousand rupees fro the said date'
nterest of Pre"construction period [#xplanation to Section 24] =here capital is *orroed *! the assessee "or the purpose o" purchase or reconstruction o" house propert! then assessee can claim deduction relating to interest o" $re+construction period. or this aggregate the interest o" $re+construction period and di)ide( it into "i)e eual instalments and "irst instalment is alloed as deduction in the pre)ious !ear in hich house is acuired or construction is completed. 6emaining "our instalments ill *e alloed as deduction in the "our immediatel! succeeding assessment !ears. ?same as in case o" ':H$@. &'ample: Mr. , takes loan o" 6s D(00(000 L1;> p.a. "or construction o" house on Rune 10( -00D and construction o" the house is completed on Ranuar! 1;( -010. ind the deduction regarding interest i" date o" repa!ment is
(i) Ranuar! 1A(-01; or (ii) Rune 0( -011 or (iii) :cto*er 1( -007. Solution:
(i) 9ate o" repa!ment is Ranuar! 1A( -01;. %here"ore( $re construction period is "rom Rune 10( -00D March 1( -00. %he interest "rom Rune 10( -00D March 1( -00 is 6s -(88(D0 the single annual instalment is 6s ;7.700 3 6s -(88(D0/;4
Ded!ct%on eg/d%ng urrent !ears
&**9'&*,*
&*,*'&,,
&*,,'&*,&
&*,&'&*,;
&*,;'&*,1
&*,1'&*,.
6s A0(000
6s A0(000
6s A0(000
6s A0(000
6s A0(000
6s D7(A70
I nc o meT a xAc t ,1 96 1
interest $re+ constructio n $eriod interest %otal deduction
19
6s ;7(700
6s ;7(700
6s ;7(700
6s ;7(700
6s ;7(700
il
6s 1(17(710
6s 1(17(710
6s 1(17(710
6s 1(17(710
6s 1(17(710
6s D7(7A0
(ii) 9ate o" repa!ment is Rune 0( -011. %here"ore( $re+construction period is "rom Rune 10(-00D March 1(-00. %he interest "rom Rune 10( -00D + March 1(-00 is 6s -(88(D0. %he single annual instalment is 6s ;7(700 36s -(88(D0/;4 $re)ious !ears Ded!ct%on eg/d%ng urrent !ears interest $re+ constructio n $eriod interest %otal deduction
(iii)
&**9'&*,*
&*,*'&,,
&*,,'&*,&
&*,&'&*,;
&*,;'&*,1
&*,1'&*,.
6s A0(000
6s A0(000
6s 1D(70
il
il
il
6s ;7(700
6s ;7(700
6s ;7(700
6s ;7(700
6s ;7(700
il
6s
6s 1(17(700
6s 7-(D0
6s ;7(700
6s ;7(700
il
9ate o" repa!ment is :cto*er 1( -007. %here"ore( $re+construction $eriod is "rom Rune 10( -00D + :cto*er 1( -007. %he interest "rom Rune 10( -00D :cto*er 1( -007 is 6s -(0(1;0. %here"ore( the single annual instalment is 6s D0(700 36s -(0(1;0/;4.
Ded!ct%on eg/d%ng urrent !ears interest $re+ constructio n $eriod interest
&**9'&*,*
&*,*'&,,
&*,,'&*,&
&*,&'&*,;
&*,;'&*,1
&*,1'&*,.
il
il
il
il
il
il
6s D0(700
6s D0(700
6s D0(700
6s D0(700
6s D0(700
il
I nc o meT a xAc t ,1 96 1
%otal deduction
6s D0(700
6s D0(700
6s D0(700
6s D0(700
6s D0(700
20
il
9i""erence in 9eductions "or ':H$ and S:H$ >et O!t Ho!"e Po#et$ <>OHP= )%+ M!n%c%#/l t/0e" le4%ed 6$ loc/l /!t3o%t$ /nd #/%d 6$ /""e""ee
Self'Occ!#%ed Re"%dent%/l Ho!"e Po#et$
3ii4
ot alloed
)%%%+
Intee"t on 6oowed c/#%t/l
)%4+
Ot3e Im#ot/nt Sect%on": >here unrealied rent is realied subse2uently [Sections 3) and 3))":
3i4
>here unrealied rent was of the pre-ious year ...,..$ or of earlier pre-ious year and was realied in assessment year ..$,.. or earlier assessment year or where unrealied rent was allowed as deduction in assessment year ..$,.. or in earlier assessment year [Section 3)": =here under the earlier la assessee has claimed deduction regarding unrealised rent in the assessment !ear -001+-00- or in earlier assessment !ear and assessee has realiFed an! amount in respect o" such rent during an! assessment !ear i.e.( -001+-00- or earlier assessment !ear i.e. -000+01 and so on then amount so realiFed ould *e 2income "rom house propert!2 o" the pre)ious !ear in hich it is realised.
Important points: Section -;, is applica*le here unrealiFed rent is o" the pre)ious !ear -000+
-001 or o" earlier pre)ious !ear. ,ssessee ill not *e eligi*le "or an! deduction under section - or -D. %he amount reco)ered ould *e ta&a*le e)en i" house is not oned *! the 3ii4
assessee in the !ear o" reco)er!. >here unrealied rent was of the pre-ious year ..$,.. or of subse2uent pre-ious year and was realied in assessment year ..,..* or subse2uent
I nc o meT a xAc t ,1 96 1
21
assessment year [Section 3))": =here assessee cannot realiFe the rent o" the pre)ious !ear -001+-00- or o" su*seuent pre)ious !ear and as realiFed in assessment !ear -00-+-00 or su*seuent !ear then amount so realiFed ould *e 2income "rom house propert!2 o" the pre)ious !ear in hich it is realiFed. Important points: Section -;,, is applica*le here unrealiFed re nt is o" the pre)ious Tear
-001+-00- or o" su*seuent pre)ious !ear. %he amount so realiFed should not *e included in Gross ,nnual alue earlier and should *e deducted "rom ,nnual rent as unreali Fed rent 36-4. I" the amount so realiFed is alread! included in Gross ,nnual alue earlier and as not deducted "rom ,nnual rent as unrealiFed rent 36-4 *ecause conditions laid don in 6ule D o" Income+ta& 6ules( 1A- are not "ul"illed then Section -;,, ill not *e applica*le. ,nd assessee ill not *e eligi*le "or an! deduction under section - or -D. %he amount reco)ered ould *e ta&a*le e)en i" house is not oned *! the assessee in the !ear o" reco)er!. )rrear of rent recei-ed in current pre-ious year [Section 30"
=here assessee is or as oner o" house propert! consisting o" *uildings or lands appurtenant thereto and recei)es an! amount as arrears o" rent in current pre)ious !ear then amount so recei)ed a"ter gi)ing standard deduction 30> o" that amount4 shall *e 2income "rom House $ropert!K pro)ided it as not charged to ta& earlier. Section -;B ould *e applica*le e)en i" assessee is not oner o" the house propert! in the current pre)ious !ear in hich rent is recei)ed. &'ample: Mr. , ons a house propert! gi)en on monthl! rent o" 6s 10(000 to a compan!. 6ent as increased on ,pril 1;( -01D "rom 6s 10(000 to 6s 1;(000 ith retrospecti)e e""ect "rom ,pril 1( -01. Solution: %he arrears o" rent o" 6s A0(000 36s ;(000 U 1-4( o" the pre)ious !ear -01+ -01D4 recei)ed in the pre)ious !ear -01D+1; ould *e 2income "rom House $ropert!2 a"ter gi)ing Standard deduction o" 0>.
,rrears o" rent recei)ed in the pre)ious !ear -01D+1; J 6s A0(000 Standard deduction J 6s 18(000 30/100 U A0(0004 %here"ore( 2income "rom House $ropert!2 during pre)ious !ear -01D+1; under section -;B J 6s A0(000 O 6s 18(000 J 6s D-(000 %his income is in addition to 2income "rom house propert!2 o" current pre)ious !ear 3-01D+1;4 as calculated according to Section - a"ter gi)ing deduction under section -D. /ouse property Gointly owned by two or more persons [Section 6"
I nc o meT a xAc t ,1 96 1
22
=here to or more persons #ointl! on a house propert! consisting o" *uildings or lands appurtenant thereto then such persons are knon as co+oners. urther( here respecti)e shares o" co+oners are 3a4 de"inite and ascertaina*le then such co+oners shall not *e assessed as ,:$s *ut the proportionate share o" each co+oner in the income "rom house propert! as calculated in accordance ith sections --+-; shall *e included in his %otal Income. 3*4 not de"inite and ascertaina*le then each co+oner shall *e deemed to ha)e eual share in the house propert!. Hence( proportionate share o" ea ch co+oner in the income "rom house propert! as calculated in accordance ith sections --+-; shall *e included in his %otal income. 5omputation of income of Fointly owned /ouse property:
3a4 =here such #ointl! oned House propert! is let out house propert! then annual )alue ill *e "irst determined according to Section -314 as i" a single person ons such propert!. %herea"ter( income "rom house propert! so calculated shall *e distri*uted amongst each co+oner as per their share 3eual share in case their respecti)e shares are not de"inite and ascertaina*le and proportionate share In case their respecti)e shares are de"inite and ascertaina*le4. 3*4 =here such #ointl! oned House propert! is sel"+occupied house propert! then annual )alue "or each o" such co+oner ill *e nil ?Section - 3-4@. But each o" such co+oner is entitled to deduction o" 6s 0(000 or 6s 1(;0(000 3in e&ceptional cases4 regarding annual interest "or loan under section -D3*4 &'ample $: Mr. ,( Mr. B and Mr. ( are co+oners o" a house propert! and their shares are de"inite and ascertaina*le i.e.( Mr. , ;0> share ( Mr. B -;> and Mr. -;> share. %he house propert! as constructed on 9ecem*er 1;( -008 and annual interest pa!a*le "or loan taken "or construction is 6s -(00(000.
O O
%he propert! is let+out house propert! ith Gross ,nnual alue 6s D(00(000. Municipal ta&es paid in current pre)ious !ear is 6s -0(000.
ind out income under head VIncome "rom House propert!K "or Mr. ,( Mr. B and Mr. Solution:
et ,nnual )alue J Gross ,nnual alue Municipal ta&es paid J 6s D(00(000 6s -0(000 J 6s (80(000 3i4 3ii4
Standard 9eduction J 6s 1(1D(000 ?0> o" 6s (80(000 J 0/100 U 6s (80(000@ 9eduction regarding interest on loan taken "or construction J 6s-(00(000
I nc o meT a xAc t ,1 96 1
23
Income "rom house propert! J 6s AA(000 J ?6s (80(000 3 6s 1(1D(000 W 6s -(00(0004@ Income "rom house propert! o" Mr. , J ;0> o" 6s AA(000 J 6s (000 Income "rom house propert! o" Mr. B J -;> o" 6s AA(000 J 6s 1A(;00 Income "rom house propert! o" Mr. J -;> o" 6s AA(00 J 6s 1A(;00 &'ample : Mr. ,( Mr. B and Mr. ( are co+oners o" a house propert! and their shares are not de"inite and ascertaina*le. %he house propert! as constructed on 9ecem*er 1;( -008 and annual interest pa!a*le "or loan taken "or construction is 6s -(00(000.
%he propert! is let+out house propert! ith O O
Gross ,nnual )alue 6s D(00(000. Municipal ta&es paid in current pre)ious !ear 6s -0(000
ind out income under the head VIncome "rom house propert!K "or Mr. ,( Mr. B( and Mr. Solution:
et ,nnual )alue J Gross ,nnual alue Municipal ta&es paid J 6s D(00(000 6s -0(000 J 6s (80(000 3i4 3ii4
Standard 9eduction J 6s 1(1D(000 ?0> o" 6s (80(000 J 0/100 U 6s (80(000@ 9eduction regarding interest on loan taken "or construction J 6s -(00(000 Income "rom house propert! J 6s AA(000 J ?6s (80(000 3 6s 1(1D(000 W 6s -(00(0004@ Income "rom house propert! o" Mr. , J 1/ o" 6s AA(000 J 6s --(000 Income "rom house propert! o" Mr. B J 1/ o" 6s AA(000 J 6s --(000 Income "rom house propert! o" Mr. J 1/ o" 6s AA(000 J 6s --(000
&'ample *: Mr. ,( Mr. B and Mr. ( are co+oners o" a house propert! and their shares are de"inite and ascertaina*le i.e.( Mr. , ;0> share ( Mr. B -;> and Mr. -;> share. %he house propert! as constructed on 9ecem*er 1;( -008 and annual interest pa!a*le "or loan taken "or construction is 6s -(00(000. %he propert! is sel"+occupied house propert! ith
O O
Municipal ta&es paid in current pre)ious !ear 6s -0(000 'oan as taken on 9ecem*er 1;( -00A
I nc o meT a xAc t ,1 96 1
24
ind out income under the head VIncome "rom house propert!K "or Mr. ,( Mr. B( and Mr. Solution:
et ,nnual )alue J il 9eduction regarding interest on loan taken "or construction J 6s 1(;0(000 Income "rom house propert! J 3+4 6s 1(;0(000 Income "rom house propert! o" Mr. , J ;0> o" 3+4 6s 1(;0(000 J 3+4 6s 7;(000 Income "rom house propert! o" Mr. B J -;> o" 3+4 6s 1(;0(000 J 3+4 6s 7(;00 Income "rom house propert! o" Mr. J -;> o" 3+4 6s 1(;0(000 J 3+4 6s 7(;00 &'ample 1: Mr. ,( Mr. B and Mr. ( are co+oners o" a house propert! and their shares are not de"inite and ascertaina*le. %he house propert! as constructed on 9ecem*er 1;( -008 and annual interest pa!a*le "or loan taken "or construction is 6s -(00(000. %he propert! is sel"+occupied house propert! ith
O O
Municipal ta&es paid in current pre)ious !ear 6s -0(000 'oan as taken on 9ecem*er 1;( -00A
ind out income under the head VIncome "rom house propert!K "or Mr. ,( Mr. B( and Mr. Solution:
et ,nnual )alue J il 9eduction regarding interest on loan taken "or construction J 6s 1(;0(000 Income "rom house propert! J 3+4 6s 1(;0(000 Income "rom house propert! o" Mr. , J 1/ o" 3+4 6s 1(;0(000 J 3+4 6s ;0(000 Income "rom house propert! o" Mr. B J 1/ o" 3+4 6s 1(;0(000 J 3+4 6s ;0(000 Income "rom house propert! o" Mr. J 1/ o" 3+4 6s 1(;0(000
I nc o meT a xAc t ,1 96 1
25
J 3+4 6s ;0(000
3et3e %ncome fom #o#et$ 6e lo"" Let,out house property: In such propert! there can *e loss under head Income "rom house propert!( i"
(i) Municipal ta&es paid in current pre)ious !ear are more than Gross annual )alue :r (ii) ,nnual interest pa!a*le *! assessee "or loan taken "or construction( acuisition( repair( etc. is more than et ,nnual alue. Self,occupied house property: ,s in such cases annual )alue is ala!s il. %here"ore i" annual interest is pa!a*le *! assessee "or loan taken "or construction( acuisition( repair( etc. then income "rom house propert! is ala!s negati)e.
B%6l%og/#3$ Books
6,%%,( RT:%I. axation ,a!s( Ath dition. e 9elhi Bharat 'a House( -01D.
