1. INCOME FROM HOUSE PROPERTY
DR. N.K.GUPTA

2. CHARGEABILITY (SEC. 22)
THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDING OR LAND APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER , SHALL BE CHARGEABLE UNDER THE HEAD ‘INCOME FROM HOUSE PROPERTY’.

3. ESSENTIAL CONDITIONS
THE PROPERTY MUST CONSIST OF BUILDINGS AND LAND APPURTENANT THERETO
THE ASSESSEE MUST BE THE OWNER OF THE PROPERTY
THE PROPERTY MAY BE USED FOR ANY PURPOSE OTHER THAN FOR HIS OWN BUSINESS OR PROFESSION

4. OWNERSHIP (MEANING)
THE ASSESSEE MUST BE HAVING THE OWNERSHIP OF THE PROPERTY. THE OWNERSHIP MUST BE BACKED BY DOCUMENTARY EVIDENCES.
HOWEVER, IT INCLUDES DEEMED OWNERSHIP.

5. DEEMED OWNERSHIP (SEC. 27)
TRANSFER TO SPOUSE
TRANSFER TO MINOR CHILD EXCEPT MINOR MARRIED DAUGHTER
HOLDER OF AN IMPARTIBLE ESTATE
MEMBER OF A CO-OPERATIVE SOCIETY
RIGHT IN PROPERTY FOR AT LEAST 12 YEARS

6. CONTD.
POSSESSION OF A HOUSE PROPERTY UNDER SECTION 53A OF TRANSFER OF PROPERTY ACT, MEANS THE SALE DEED IS NOT REGISTERED IN THE NAME OF THE ASSESSEE. HOWEVER, THE SALE CONSIDERATION HAS BEEN PAID. FOR EXAMPLE: POWER OF ATTORNEY, ETC.

7. TAX FREE INCOME FROM HOUSE PROPERTY
INCOME FROM HOUSE PROPERTY IN THE VICINITY OF AGRICULTURAL LAND [SEC. 2(1A)(C)];
INCOME FROM ONE PALACE IN THE OCCUPATION OF A EX-RULER [SEC. 10(19A)]
INCOME FROM HOUSE PROPERTY USED FOR OWN BUSINESS OR PROFESSION

8. TAX EXEMPT INCOMES (CONTD.)
INCOME FROM HOUSE PROPERTY BELONGS TO:
a. A LOCAL AUTHORITY [SEC. 10(20)]
b. A SCIENTIFIC RESEARCH ASSOCIATION [SEC. 10(21)]
c. A REGISTERED TRADE UNION [SEC. 10(24)]
d. A POLITICAL PARTY [SEC. 13A]
e. A CHARITABLE TRUST [SEC. 11(1)]

9. TAX EXEMPT INCOMES (CONTD.)
ONE SELF OCCUPIED HOUSE PROPERTY [SEC 23(2)(a)]
INCOME FROM SELF OCCUPIED PROPERTY WHICH COULD NOT BE USED DURING THE PREVIOUS YEAR [SEC. 23(2)(b)]

10. COMPUTATION OF INCOME FROM HOUSE PROPERTY
GROSS ANNUAL VALUE
LESS: UNREALISED RENT
LESS: MUNICIPAL TAXES PAID
ANNUAL VALUE
LESS: STATUTORY 30% OF ANNUAL VALUE
LESS: INTEREST ON BORROWED MONEY FOR THE PURPOSES OF HOUSE PROPERTY__________
INCOME FROM HOUSE PROPERTY

11. DETERMINATION OF ANNUALVALUE [SEC. 23(1)]
FIRST CALCULATE GROSS ANNUAL VALUE WHICH CAN BE CALCULATED AS FOLLOWS:
FAIR RENT OR MUNICIPAL VALUE WHICHEVER IS HIGHER BUT SUBJECT TO STANDARD RENT (RENT DECIDED BY RENT CONTROL AUTHORITY) A
ACTUAL ANNUAL RENT B
GROSS ANNUAL VALUE WILL BE A OR B WHICH EVER IS HIGHER

12. COMPUTATION OF GROSS ANNUAL VALUE IN DIFFERENT CASES
LET OUT PROPERTY FOR THE FULL YEAR
GROSS ANNUAL VALUE WILL BE CALCULATED AS ABOVE
LET OUT PROPERTY REMAINS VACANT FOR A PART OF THE YEAR
GROSS ANNUAL VALUE WILL BE REDUCED BY ACTUAL RENT FOR THE VACANCY PERIOD

13. CONTD. SELF OCCUPIED PROPERTY FOR THE WHOLE YEAR
IN THIS CASE ANNUAL VALUE WILL BE TAKEN AS NIL
DEEMED LET OUT PROPERTY
IF MORE THAN ONE PROPERTY IS SELF-
OCCUPIED THEN ONLY ONE PROPERTY WILL BE TREATED AS SELF OCCUPIED WHILE OTHERS WILL BE TREATED AS DEEMED LET OUT

14. CONTD. PARTLY SELF OCCUPIED AND PARTLY LET OUT PROPERTY
TREAT THIS PROPERTY AS MORE THAN ONE PROPERTY AND CALCULATE THE GROSS ANNUAL VALUE PROPORTIONATELY (OWNER OCCUPIED PORTION WILL BE TREATED AS SELF OCCUPIED AND TENANT OCCUPIED PORTION WILL BE TREATED AS LET OUT)

15. CONTD.
PROPERTY LET OUT FOR A PART OF THE YEAR AND SELF OCCUPIED FOR ANOTHER PART
THIS PROPERTY WILL BE TREATED AS IF LET OUT FOR THE WHOLE YEAR AND FAIR RENT WILL BE TAKEN FOR THE WHOLE YEAR BUT ACTUAL RENT WILL BE TAKEN FOR THE PERIOD LET

16. CONTD. PROPERTY OWNED BY CO-OWNERS
DIFFERENT PORTIONS OWNED BY CO-OWNERS WILL BE VALUED AS IF IT IS A CASE OF DIFFERENT PROPERTIES. EACH SHARE WILL BE A UNIT ITSELF AND ANNUAL VALUE WILL BE CALCULATED ACCORDINGLY.

17. TREATMENT OF INTEREST
IF THE ASSESSEE HAS BORROWED SOME MONEY FOR THE CONSTRUCTION, REPAIRING ETC. THEN ACTUAL INTEREST PAYABLE/PAID FOR THE CURRENT FINANCIAL YEAR WILL BE DEDUCTED IN FULL. IF ANY COMMISSION, ETC. IS PAID FOR ARRANGING THE LOAN THEN, IT WILL NOT BE ALLOWED.

18. PRE-CONSTRUCTION INTEREST
INTEREST PAYABLE BY THE ASSESSEE IN RESPECT OF THE PERIOD BEFORE THE CONSTRUCTION WILL BE CALCULATED FROM THE DATE OF BORROWING TO 31ST MARCH IMMEDIATELY BEFORE THE DATE OF COMPLETION OR REPAYMENT OF LOAN WHICHEVER IS EARLIER.

19. PRE-CONSTRUCTION INTEREST CONTD.
THE AMOUNT OF PRE-CONSTRUCTION INTEREST WILL BE ALLOWED IN FIVE ANNUAL EQUAL INSTALMENTS COMMENCING FROM THE PREVIOUS YEAR IN WHICH THE HOUSE IS ACQUIRED OR CONSTRUCTED

20. INTEREST IN CASE OF SELF-OCCUPIED PROPERTY
WHERE THE PROPERTY IS ACQUIRED OR CONSTRUCTED WITH BORROWED MONEY ON OR AFTER AND SUCH CONSTRUCTION IS COMPLETED WITH IN THREE YEARS OF THE END OF THE FINANCIAL YEAR IN WHICH THE CAPITAL WAS BORROWED, THE DEDUCTION WILL BE RESTRICTED TO RS. 1,50,000 OTHERWISE RS. 30,000.

21. COMPOSITE RENT
IF OWNER CHARGES RENT INCLUSIVE OF SERVICES THEN IT IS KNOWN AS COMPOSITE RENT.
IF RENT OF THE PROPERTY CAN BE RECOGNISED SEPRATELY THEN, IT WILL BE CALCULTED IN THIS HEAD OTHERWISE IT WILL BE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES OR BUSINESS AND PROFESSION AS THE CASE MAY BE

22. RECOVERY OF UNREALISED RENT
WHERE A DEDUCTION HAS BEEN CLAIMED AND ALLOWED IN RESPECT OF UNREALISED RENT IN ASSESSEMENT YEAR OR PRIOR TO THAT AND SUBSEQUENTLY THE ASSESSEE REALISES THE AMOUNT, THE AMOUNT SO REALISED WILL BE TREATED AS INCOME OF THE YEAR OF RECEIPT IRRESPECTIVE OF THE OWNERSHIP OF THE ASSESSEE.

23. CONTD.
WHERE THE UNREALISED RENT IS RECOVERED WITH RESPECT OF ASSESSEMENT YEAR ONWARDS AND REALISED SUBSEQUENTLY THEN IT WILL BE TAXABLE DURING THE YEAR OF RECEIPT, HOWEVER STATUTORY DEDUCTION OF 30 % WILL BE ALLOWED.

24. SOME ILLUSTRATIONS 1. COMPUTE THE ANNUAL VALUE IN THE FOLLOWING CASES
A B
Rs Rs.
FAIR RENT ,40,000 1,30,000
ACTUAL RENT ,16,000 1,80,000
UNREALISED RENT , ,000
MUNICIPAL TAX PAID , ,000

25. SOLUTION 1. A B Rs. Rs GROSS ANNUAL VALUE 2,40,000 1,80,000
LESS: UNREALISED RENT , ,000
LESS: MUNICIPAL TAXES , ,000
ANNUAL VALUE ,74, ,30,000

26. ILLUSTRATION 2
MR. A OWNS A HOUSE IN DELHI. FROM THE FOLLOWING PARTICULARS GIVEN BELOW, COMPUTE THE INCOME FROM THE HOUSE PROPERTY FOR THE ASSESSMENT YEAR
MUNICIPAL VALUE
2,20,000
FAIR RENT
2,62,000
STANDARD RENT
2,45,000
ACTUAL RENT (PER MONTH)
24,000
MUNICIPAL TAXES PAID
22,000
EXPENSES ON REPAIRS
10,000
INSURANCE PREMIUM
4,000

27. CONTD.
A HAD BORROWED A SUM OF 12% P.A. ON AND THE CONSTRUCTION OF THE HOUSE WAS COMPLETED ON

28. SOLUTION 2 GROSS ANNUAL VALUE SHALL BE HIGHER OF THE FOLLOWING TWO:
M.V. RS. 2,20,000 OR F.R.V. RS. 2,62,000 BUT
RESTRICTED TO STANDARD RENT, OR 2,45,000
ACTUAL RENT (24,000 X 12) (BEING GROSS
ANNUAL VALUE) 2,88,000
LESS: MUNICIPAL TAXES PAID ,000
NET ANNUAL VALUE 2,66,000
LESS: DEDUCTIONS U/S 24
i) 30% OF N.A.V ,800
ii) INTEREST ON BORROWED MONEY ,62, ,41,800
INCOME FROM HOUSE PROPERTY ,200

29. CONTD. NOTE: CALCULATION OF INTEREST: PRE-CONSTRUCTION PERIOD
10,00,000 X 12/100 X 21/12 X 1/5 42,000
ii) CURRENT YEAR INTEREST
10,00,000 X 12/ ,20,000
1,62,000

30. ILLUSTRATION 3
Y HAS A HOUSE WHICH HAS TWO IDENTICAL UNITS. ONE OF THE UNITS IS SELF-OCCUPIED THROUGHOUT THE PREVIOUS YEAR AND THE OTHER UNIT IS LET OUT THROUGHOUT THE PREVIOUS YEAR ON A RENT OF RS. 5,000 P.M. MUNICIPAL TAXES FOR THE COMPLETE HOUSE AMOUNTING TO RS. 6,000 HAVE BEEN PAID DURING THE PREVIOUS YEAR. THE CONSTRUCTION OF THE PROPERTY WAS COMPLETED ON DETERMINE THE INCOME FROM HOUSE PROPERTY FOR THE A.Y

31. SOLUTION UNIT I UNIT II (LET OUT) (SELF-OCCUPIED) Rs. Rs.
GROSS ANNUAL VALUE ,000 NIL
LESS: MUNICIPAL TAXES 3,
NET ANNUAL VALUE ,000 NIL
LESS: STATUTORY
30% ,100 NIL
INCOME FROM HOUSE
PROPERTY ,900 NIL

32. ILLUSTRATION 4
IN THE PREVIOUS QUESTION, ILLUSTRATION 3, IF SELF OCCUPIED PORTION WAS LET OUT FOR THREE MONTHS, THEN WHAT WILL BE THE INCOME FROM HOUSE PROPERTY?

33. SOLUTION UNIT I UNIT II (LET OUT) (SELF-OCCUPIED) Rs. Rs.
GROSS ANNUAL VALUE ,000 60,000
LESS: MUNICIPAL TAXES 3, ,000
NET ANNUAL VALUE , ,000
LESS: STATUTORY
30% , ,100
INCOME FROM HOUSE
PROPERTY , ,900

34. ILLUSTRATION 5
WHAT WILL BE THE INCOME FROM HOUSE PROPERTY IF IN THE PREVIOUS QUESTION, ILLUSTRATION 4, THE LET OUT PORTION IS SELF-OCCUPIED FOR 3 MONTHS?

35. SOLUTION
SINCE UNIT I, IS PART OF THE YEAR LET OUT AND PART OF THE YEAR SELF-OCCUPIED, THE PERIOD OF OCCUPATION OF THIS UNIT FOR OWN RESIDENCE SHALL BE IRRELEVANT AND THE ANNUAL VALUE OF SUCH UNIT SHALL BE DETERMINED AS IF IT IS LET.
HENCE, THE EXPECTED RENT AS PER SEC. 23(1)(a) SHALL BE TAKEN FOR THE FULL YEAR BUT THE ACTUAL RENT SHALL BE TAKEN FOR THE PERIOD LET.

36. CONTD.
IN THE ABOVE QUESTION, THE EXPECTED RENT WILL BE TAKEN ON THE BASIS OF ACTUAL RENT WHICH CAN BE ASSUMED AS FAIR RENT IN THE ABSENCE OF ANY OTHER INFORMATION AVAILABLE.
HENCE, THERE WILL BE NO CHANGE IN THE ANSWER AS THE EXPECTED RENT WILL BE RS. 60,000 ALTHOUGH THE ACTUAL RENT RECEIVED AND RECEIVABLE SHALL BE RS. 45,000 i.e. RS. 5,000 X 9.

37. ILLUSTRATION 6
X HAS A HOUSE PROPERTY SITUATED IN DELHI. FROM THE FOLLOWING PARTICULARS SUBMITTED TO YOU, COMPUTE THE INCOME FROM HOUSE PROPERTY FOR THE ASSESSMENT YEAR
MUNICIAPAL VALUATION ,000
FAIR RENT 1,10,000
STANDARD RENT 1,00,000
THE HOUSE PROPERTY WAS LET OUT W.E.F FOR RS. 8,000 P.M. WHICH WAS VACATED BY TENANT ON

38. CONTD.
IT REMAINED VACANT FOR 2 MONTHS. AND W.E.F , IT WAS LET OUT FOR Rs.11,000 P.M.
MUNICIPAL TAXES PAID % OF MUNICIPAL VALUATION
INSURANCE PREMIUM PAID - RS. 3,000
INTEREST ON MONEY
BORROWED FOR PURCHASE
OF HOUSE PROPERTY RS. 30,000

39. SOLUTION
COMPUTATION OF GROSS ANNUAL VALUE WHICH SHALL BE HIGHER OF THE FOLLOWING TWO:
EXPECTED RENT i.e. MUNICIPAL VALUE OR FAIR RENT WHICHEVER IS MORE i.e. RS. 1,10,000 BUT IT CANNOT EXCEED RS. 1,00,000 (i.e. STANDARD RENT). SO, IT SHOULD BE RS. 1,00,000
ACTUAL RENT RECEIVED OR RECEIVABLE
8,000 X ,000
11,000 X ,000
92,000
ANNUAL VALUE SHALL BE RS. 92,000 AS IT IS LESS THAN EXPECTED RENT OWING TO VACANCY.

40. CONTD. Rs. GROSS ANNUAL VALUE 92,000 LESS: MUNICIPAL TAXES PAID 18,000
NET ANNUAL VALUE 74,000
LESS: DEDUCTIONS U/S 24
A) STATUTORY
30% ,200
B) INTEREST ,000 52,200
INCOME FROM HOUSE PROPERTY 21,800

41. ILLUSTRATION 7
Y OWNS A HOUSE IN DELHI. DURING THE PREVIOUS YEAR , 3/4TH PORTION OF THE HOUSE WAS SELF-OCCUPIED FOR FULL YEAR AND 1/4TH PORTION WAS LET OUT FOR RESIDENTIAL PURPOSES FROM TO ON A RENT OF RS. 700 P.M. FROM , THIS PORTION WAS ALSO USED FOR OWN RESIDENCE. MUNICIPAL VALUATION OF THE HOUSE IS RS. 20,000. HE INCURRED THE FOLLOWING EXPENDITURE IN RESPECT OF THE HOUSE PROPERTY:

42. CONTD.
MUNICIPAL TAXES DUE RS. 6,000; REPAIRS RS. 2,000; FIRE INSURANCE PREMIUM RS. 3,500; LAND REVENUE RS. 4,000; GROUND RENT RS. 200 WERE PAID DURING THE YEAR. A LOAN OF RS. 1,00,000 WAS TAKEN ON 9% P.A. FOR THE CONSTRUCTION OF THE HOUSE WHICH WAS COMPLETED ON NOTHING WAS REPAID ON LOAN ACCOUNT SO FAR.
FIND OUT HIS INCOME FROM HOUSE PROPERTY FOR THE A.Y

43. SOLUTION
THERE ARE TWO UNITS OF THE HOUSE . UNIT I WITH 3/4TH FLOOR AREA IS SELF-OCCUPIED THROUGHOUT THE YEAR AND NO BENEFIT IS DERIVED FROM THAT UNIT, HENCE IT WILL BE CONSIDERED SELF-OCCUPIED AND ITS ANNUAL VALUE SHALL BE NIL. UNIT 2 WITH FLOOR AREA OF 1/4TH IS THOUGH SELF-OCCUPIED BUT PART OF THE YEAR LET OUT. HENCE, THE ANNUAL VALUE OF UNIT 2 SHALL BE DETERMINED AS PER SECTION 23(1).

44. CONTD. UNIT I (3/4TH FLOOR AREA) ANNUAL VALUE NIL
LESS: DEDUCTIONS U/S 24(B)
INTEREST 75% OF RS. 9, ,750
INCOME FROM SELF-OCCUPIED

45. CONTD. GROSS ANNUAL VALUE HIGHER OF THE FOLLOWING TWO:
UNIT II (1/4TH FLOOR AREA)
GROSS ANNUAL VALUE HIGHER OF THE FOLLOWING TWO:
EXPECTED RENT ,400
ACTUAL RENT RECEIVED OR
RECEIVABLE (700 X 9) ,300
GROSS ANNUAL VALUE ,400
LESS: DEDUCTIONS U/S 24
STATUTORY 30% ,520
INTEREST (¼) , ,770
3,630

46. CONTD. INCOME FROM HOUSE PROPERTY UNIT I - 6750 UNIT II 3,630
LOSS OF Rs. 3,120

47. THANKS