M.s college of art science , commerce & bms HOUSE PROPERTY

INCOME FROM HOUSE PROPERTY CHARGEABILITY [SEC. 22 TO 27] INCOME IS TAXABLE UNDER THE HEAD “INCOME FROM- HOUSE PROPERTY” , IF THE FOLLOWING THREE CONDITIONS ARE SATISFIED : CONDITION 1 :THE PROPERTY SHOULD CONSIST OF ANY BUILDINGS OR LANDS APPURTENANT THERETO. CONDITION 2: THE ASSESSEE SHOULD BE OWNER OF THE PROPERTY. (MAY BE DEEMED OWNER) CONDITION 3: THE PROPERTY SHOULD NOT BE USED BY THE OWNER FOR THE PURPOSE OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM, THE PROFITS OF WHICH ARE CHARGEABLE TO TO INCOME TAX.

INCOME. BUT IT’S TAXABLE EITHER UNDER THE HEAD “PROFITS AND GAINS OF BUSINESS OR PROFESSION” OR UNDER THE HEAD “ INCOME FROM OTHER SOURCES” , AS THE CASE MAY BE. BUILDINGS : AS DEFINED BY THE RANDOM HOUSE OF DICTIONARY OF THE ENGLISH LANGUAGE DEFINES BUILDING AS “ RELATIVELY PERMANENT, ESSENTIALLY BOX-LIKE CONSTRUCTION HAVING A ROOF AND USED FOR ANY OF WIDE VARIETY OF ACTIVITIES, AS LIVING, ENTERTAINING OR MANUFACTURING. BUILDING IS ALSO DEFINED BY THE WEBSTER’S NEW INTERNATIONAL DICTIONARY, ACCORDING TO ITS MEANING OF BUILDING : “THAT WHICH IS BUILT ; SPECIFICALLY, AS NOW GENERALLY USED, A FABRIC OR EDIFICE, FRAMED OR CONSTRUCTED, DESIGNED TO STAND MORE OR LESS PERMANENTLY, AND COVERING A SPACE OF LAND, FOR USE AS A DWELLING, STORE HOUSE, FACTORY, SHELTER FOR BEASTS OR

SOME OTHER USEFUL PURPOSE ; BUILDING IN THIS SENSE DOES NOT INCLUDE A MERE WALL, FENCE, MONUMENT, HOARDING OR SIMILAR STRUCTURE THOUGH DESIGNED FOR PERMANENT USE WHERE IT STANDS ; NOT A STEAM BOAT, SHIP OR OTHER VESSEL OF NAVIGATION.” OWNERSHIP:- INCOME IS TAXABLE UNDER THE HEAD, “INCOME FROM HOUSE PROPERTY” ONLY IF THE ASSESSEE IS THE OWNER OF A HOUSE PROPERTY.” THE WORD “OWNER” MEANS A LEGAL OWNER. FOR THE PURPOSE OF SECTION 22, OWNER MAY BE AN INDIVIDUAL, FIRM, COMPANY, CO-OPERATIVE SOCIETY, OR ASSOCIATION OF PERSONS. GIFT OF RENTAL INCOME TO A FRIEND OR A RELATIVE, WITHOUT TRANSFERRING OWNERSHIP OF THE PROPERTY, ANNUAL VALUE OF PROPERTY IS TAXABLE IN THE HANDS OF

THE DONOR, EVEN IF THE RENTAL INCOME IS RECEIVED BY THE DONEE THE DONOR, EVEN IF THE RENTAL INCOME IS RECEIVED BY THE DONEE. { RELATED CASE LAW S. KARTAR SINGH V. CIT [1969] 73 ITR 438 (DELHI).}] INCOME FROM SUBLETTING :- INCOME FROM “SUBLETTING” OF HOUSE PROPERTY IS NOT TAXABLE UNDER SECTION 22 OF INCOME TAX ACT 1961, BUT IS TAXABLE UNDER SECTION 56 UNDER THE HEAD, “INCOME FROM OTHER SOURCES.” INCOME FROM A BUILDING WHICH IS NECESSARY FOR AGRICULTURE ACTIVITIES SUCH AS FARM HOUSE, ROOM FOR WORKERS, IS NOT TAXABLE UNDER THE HEAD, “INCOME FROM HOUSE PROPERTY.” OWNERSHIP NEED NOT BE EXTENDED TO SITE :- IT MEANS THAT OWNERSHIP SHOULD EXTEND TO THE SITE ON WHICH BUILDING STANDS AS WELL AS TO THE SUPERSTRUCTURE. FOR INSTANCE, IF A PERSON BUILDS A SUPERSTRUCTURE UPON A SITE HELD BY

OWNERSHIP IN CERTAIN TYPICAL CASES :- HIM UNDER A LEASEHOLD AGREEMENT, HE WILL BE THE OWNER OF THE SUPERSTRUCTURE AND, ACCORDINGLY, ANNUAL VALUE OF THE SUPERSTRUCTURE WOULD BE TAXABLE IN HIS HANDS DURING THE CURRENCY OF LEASE. {RELATED CASE LAW CIT V. ESTATE OF OMPRAKASH JHUNJHUNWALA [2002] 124 TAXMAN 111 (CAL.) OWNERSHIP IN CERTAIN TYPICAL CASES :- PROPERTY IN CASE OF INSOLVENCY VESTS IN THE OFFICIAL ASSIGNEE. THEREFORE, OFFICIAL ASSIGNEE CAN BE TREATED AS “OWNER” FOR THE PURPOSE OF SECTION 22. WHERE RECEIVER IS APPOINTED BY THE COURT, THE PROPERTY OF THE INSOLVENT DOES NOT VEST IN THE RECEIVER SO RECEIVER CAN NOT BE TREATED AS “OWNER” FOR THE PURPOSE OF SECTION 22. IN CASE OF MORTGAGE OF PROPERTY, MORTGAGOR OF PROPERTY IS ALONE CHARGED TO TAX UNDER SECTION 22.

WHERE A PROPERTY IS OWNED BY PARTNERSHIP, IT IS THE FIRM WHICH IS ASSESSABLE UNDER SECTION 22. WHERE PROPERTY IS HELD UNDER A TRUST, THE INCOME UNDER SECTION 22 IS TAXABLE EITHER IN THE HANDS OF TRUSTEES OR IN THE HANDS OF BENEFICIARIES. UNDER A WILL, LIFE INTEREST IN THE DECEASED’S PROPERTY IS GIVEN TO SPECIFIC LEGATEES, ANNUAL VALUE WILL BE ASSESSABLE IN THE HANDS OF LEGATEE AND NOT IN THE HANDS OF EXECUTOR. DEEMED OWNER :- SECTION 27 PROVIDES THAT THE FOLLOWING PERSONS ARE TO BE TREATED AS “ DEEMED OWNER” OF HOUSE PROPERTY FOR THE PURPOSE OF CHARGING TAX ON ANNUAL VALUE UNDER THE HEAD “INCOME FROM HOUSE PROPERTY”. TRANSFER TO SPOUSE OR MINOR CHILD HOLDER OF IMPARTIAL ESTATE

PROPERTY HELD BY A MEMBER OF CO-OPERATIVE SOCIETY/COMPANY/AOP A PERSON WHO HAS ACQUIRED A PROPERTY UNDER A POWER OF ATTORNEY TRANSACTION A PERSON WHO HAS ACQUIRED A RIGHT IN A BUILDING UNDER SECTION 269 UA DEPRECIATION :- IT IS IMPORTANT TO NOTE THAT IN RESPECT OF HOUSE PROPERTY OWNED BY THE ASSESSEE AND USED BY HIM FOR HIS OWN BUSINESS OR PROFESSION, DEPRECIATION IS ALLOWABLE UNDER SECTION 32. HOUSE PROPERTY IN A FOREIGN COUNTRY:- A RESIDENT ASSESSEE IS TAXABLE UNDER SECTION 22 IN RESPECT OF ANNUAL VALUE OF PROPERTY SITUATED IN A FOREIGN COUNTRY. A RESIDENT BUT NOT ORDINARILY RESIDENT OR NON-RESIDENT IS, HOWEVER, CHARGEABLE UNDER SECTION 22 IN RESPECT OF INCOME OF A HOUSE PROPERTY SITUATED

PROPERTY INCOME EXEMPT FROM TAX ABROAD , IF INCOME IS RECEIVED IN INDIA DURING THE PREVIOUS YEAR. DISPUTED OWNERSHIP:- IF THE TITLE OF OWNERSHIP OF A HOUSE PROPERTY IS UNDER DISPUTE IN A COURT OF LAW, THE DECISION AS TO WHO IS THE OWNER RESTS WITH THE INCOME TAX DEPARTMENT. THE IT DEPARTMENT PRIMA FACIE THE POWER TO DECIDE WETHER THE ASSESSEE IS THE OWNER AND IS CHARGEABLE TO TAX UNDER SECTION 22. PROPERTY HELD AS STOCK-IN-TRADE:- SUCH PROPERTY IS NOT CHARGEABLE TO TAX UNDER THE HEAD “INCOME FROM HOUSE PROPERTY”. IT IS CHARGEABLE TO TAX UNDER THE HEAD “PROFITS AND GAINS OF BUSINESS OR PROFESSION”. PROPERTY INCOME EXEMPT FROM TAX PROPERTY INCOME IS EXEMPT FROM TAX IN THE FOLLOWING CASES:

INCOME FROM FARM HOUSE [ SEC. 2(1A) READ WITH SEC. 10(1)] ANNUAL VALUE OF ANY ONE PALACE OF AN EX-RILER [SEC.10(19A)] PROPERTY INCOME OF A LOCAL AUTHORITY [ SEC. 10(20)] PROPERTY INCOME OF AN APPROVED SCIENTIFIC RESEARCH ASSOCIATION [SEC. 10(21)] PROPERTY INCOME OF A UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIONS [SEC. 10(23C)] PROPERTY INCOME OF A HOSPITAL OR OTHER MEDICAL INSTITUTIONS [SEC. 10(23C)] PROPERTY INCOME OF A TRADE UNION [SEC. 10(24)] HOUSE PROPERTY HELD FOR CHARITABLE PURPOSE [SEC.11] PROPERTY INCOME OF A POLITICAL PARTY [SEC. 13A] PROPERTY USED FOR OWN BUSINESS OR PROFESSION [SEC.22] ONE SELF-OCCUPIED PROPERTY [SEC.23(2)]

COMPUTATION OF INCOME FROM A LET OUT HOUSE PROPERTY GROSS ANNUAL VALUE KKKK LESS:MUNICIPAL TAXES KKKK NET ANNUAL VALUE KKKK LESS:DEDUCTIONS UNDER SECTION 24 -STANDARD DEDUCTION KKKK -INTEREST ON BORROWED CAPITAL KKKK INCOME FROM HOUSE PROPERTY KKKK COMPUTATION OF INCOME FROM SELF-OCCUPIED HOUSE PROPERTY THERE MAY BE TWO CONDITION IN CASE OF PROPERTY

SELF-OCCUPIED- A PROPERTY OCCUPIED FOR OWN BUSINESS PURPOSES WHEN MORE THAN ONE PROPERTY IS OCCUPIED FOR OWN RESIDENTIAL PURPOSES IN FIRST CONDITION, NO INCOME IS CHARGEABLE TO TAX UNDER THE HEAD “INCOME FROM HOUSE PROPERTY”. IN SECOND CONDITION OF ABOVE WHERE THE PERSON HAS OCCUPIED MORE THAN ONE HOUSE FOR HIS OWN RESIDENTIAL PURPOSES, ONLY ONE HOUSE (ACCORDING TO HIS CHOICE) IS TREATED AS SELF OCCUPIED AND ALL OTHER HOUSES WILL BE “DEEMED TO BE LET OUT “.

“IN CASE OF SELF OCCUPIED HOUSE PROPERTY GAV(GROSS ANNUAL VALUE ) OF A PROPERTY WOULD BE NIL AND ACCORDINGLY ASSESSEE CAN CLAIM A DEDUCTION U/S 24 (b) I.E. IT GENERATES NEGATIVE INCOME RS.30000/- OR RS.150000/-, AS THE CASE MAY BE.” MAXIMUM CEILING IF CAPITAL IS BORROWED ON OR AFTER APRIL 1, 1999- IF THE FOLLOWING THREE CONDITIONS ARE SATISFIED, INTEREST ON BORROWED CAPITAL IS DEDUCTIBLE UPTO RS.150000/- CAPITAL IS BORROWED ON OR AFTER APRIL 1, 1999 FOR ACQUIRING OR CONSTRUCTION A PROPERTY THE ACQUISITION OR CONSTRUCTION SHOULD BE COMPLETED WITHIN 3 YEARS, FROM THE END OF

FINANCIAL YEAR IN WHICH THE CAPITAL WAS BORROWED. THE PERSON HAS TO CERTIFY THAT THE LOAN AND INTEREST AMOUNT, WHICH IS PAYABLE OR PAID BY HIM, IS TAKEN ONLY ACQUISITION OR CONSTRUCTION PURPOSES. IF THE CAPITAL IS BORROWED FOR ANY OTHER PURPOSES ( REPAIRS, RECONSTRUCTION AND RENEWALS), THEN THE MAXIMUM AMOUNT OF INTEREST WOULD BE RS.30000/-. THERE IS NO STIPULATION THAT THE AMOUNT BORROWED BEFORE OR AFTER APRIL 1, 1999. IF A HOUSE PROPERTY IS NOT ACTUALLY OCCUPIED BY THE OWNER OWING TO EMPLOYMENT OR BUSINESS/PROFESSION, CARRIED ON AT ANY OTHER

PLACE, THEN HIS INCOME IS CHARGEABLE [U/S 23(2)(b)] SIMILAR TO SELF OCCUPIED HOUSE PROPERTY. WHERE A PROPERTY IS PARTLY SELF-OCCUPIED AND PARTLY IS LET OUT, THEN QUESTION MUST BE SOLVED BY TWO WAYS, FIRST IS TAKING UNITS AND OTHER IS % WISE. WHERE A UNREALSED RENT IS SUBSQUESNTLY REALISED [U/S 25a AND 25aa], IF THE AMOUNT IS SO RECOVERED PREVIOUSLY ALLOWED AS DEDUCTION, THEN NOW IT WOULD BE TAXABLE. WHERE ARREARS OF RENT IS RECEIVED , A SIMPLE STANDARD DEDUCTION U/S 24 (30%) IS AVAILABLE TO THE OWNER, EVEN IF HE/SHE IS NOT OWNER IN THE PREVIOUS YEAR WHEN INCOME IS DERIVED.