INCOME FROWN | HOUSE PROPERT & BASIS OF CHARGE ‘ Under the head ‘Income from House Property’ the basis of charge is the annual vay Property : 1 @ consists of any buildings or lands appurtenant thereto, Gi) of which the assessee is the owner, and (Gi) “which is not used for the purposes of assessee's business or profession. (Su: & (@) Buildings or lands appurtenant thereto Under the head ‘Income from House Property’ income is computed on buildings and lal sppurtenant thereto. A land which is not appurtenant, to any building does not come wits the scope of this section. Income from such land is taxable under the head ‘Income from Oi Sources’. The appurtenant to the building includes compound, play-ground, kitchen gai courtyard, ete. In the case of non-residential building, car parking spaces, drying grounds, ss grounds, connecting roads in the factory area shall be lands appurtenant to buildings. Exceptions : ‘The following are the exceptions to the general rule that income from house proper taxable under the head ‘Income from House Property’ : (a) Building or staff quarters let out to employees and others : If the assessee lets out building or staff quarters to the employees of business whose residence is a necessity for efficient conduct of business, the rent collected from such employees is assessable as income ira] business and not as income from house property. (b) Building let out to authorities for locating bank, post office, police station, ete. : |nco® from such building will be assessable as income from business and not as income from hos property, provided the dominant purpose of letting out the building is to enable the assess" carry on his business more efficiently and smoothly, (c) Composite letting of building with other assets : Where the assessee lets on i" machinery, plant or furniture belonging to him and also buildings for a composite rent and rent of the buildings is inseparable from the rent of the said machinery, plant or the furit the income from such letting is not chargeable to income tax under the head ‘Income House Property’ but it is taxable under the head ‘Income from Other Sources’ or under head “Profits and Gains of Business or Profession”, if such letting is his Pune 562i (d) Paying-guest accommodation : It is assessable as business income. as ines of a memorandum of association, the main object of the assessee cont was to acquire properties and earn income by letting out same, said income was brought as business income and not as income from house property.INCOME (2) The ase; FROM HOU OA ie only the ownen Ot be the owe ee RoEETY income. Where the assesges °° house propane! the am " twit ee ii Proj ‘ouse or reletting, it will be taxable 1° lessee ofa haifan? 8 able Cea: 4 head ‘Income from House Propane” the head ‘twas and he derives an incount gs road of ty’. ie from Oth, income from subletting (The person ii ‘er Sources’ and not under the Gi) In case of a mortgage, who transfers any eee of the property ; (See. 27) I ty to his or he . connection er spouse, without ade ite ty so transferred. her shall be deem Ueonecne oes apart orto (&)A member of a Co-operative Soc; owner of the house Reece : Society, C or its part is all ty, Compar dott, building o eras Hotted or leased under a house builan eoeiation of Persons to whom a SNA Person who is allowed tere jon of that property, me the seit, company i retain posse: - 's ceairat (referred to in the Transfer of Property hoy hy) bulaing in par performance leemed e owner of that (Sec. 27(iia)} iding. (@) A person having lease rights in th aAR ate including the torn feo ereerty under a lease extending to 12 years or tobe the owner of the property. which the lease may be extended shall be deemed (©) Ifa person takes | ee es land on lease and constructs a house upon it, he will be deemed to be © Disputed Ownership : If the title of ownership is di: i eines Os ownership is disputed in a court of law, the recipient of ental income or the person who is in possession ofthe property as the owner is 2 (3) It is not used for the purposes of assessee’s business or profession If the property or a portion of it is occupied by the assessee for the purpose of his own business or profession and the profits of such business or profession are assessable to tax, the annual value in respect of such property or portion of it is not taxable as income from house property and also nothing will be deductible as expenditure on rent of these premises in computing the profits of business or profession. EXEMPTIONS REGARDING INCOME FROM HOUSE PROPERTY ; There are two types of exemptions regarding income from house property : (1) Income is not included in gross total income (i.e., fully exempt), and (2) Income is included in assessee's gross total income but the deduction is allowed from gross total income, on Fully Exempted Incomes sea i Income). (1) “Income from farm house (See details in chapter Agricultural — qAte, (2) Annual Value of one palace of ex-Indian Ruler. [See. 10(19A)] (3) Income from PRPa ty owned by : Local Authority; ine Scientific Research Association; (ii) Trade alone ; (iv) Charitable Trust; nk wee ; (y) Political Party: cational institution existing for educational purposes i) University or other nt ; ' “7 ve id not for purposes of pet existing for philanthropic (vii) Hospital or medical institut porneet. for purposes of profits.INCOME TAX (4) Income from property used for assessee’s own business or profession. (5) Income from two self-occupied house. (6) Income from the house meant for self-residence but could not be occupied the previous year on account of his service, business or profession at anyother Q 2. Deductible from Gross Total Income 2) Income of a co-operative society from the letting of godowns or warehouse, storage of commodities meant for sale (See. sop, (2) Income of a co-operative society from house property, provided its gross total in 2! does not exceed & 20,000 and the society is not a housing society, urban eonsus co-operative society, transport society or society manufacturing goods with the of power. a Q Other Important Points regarding Income from House Property (2) Income from house property situated abroad : Income from House Property situated a foreign country is taxable only in the case of residents. If a foreign property is taxed in fe it will be taxable under the head ‘Income from House Property’ and its annual value shall computed as if the property is situated in India. (2) Property owned by co-owners : Where a property is owned by two or more jointly and their respective shares are definite and ascertainable, income from such shall not be assessed on such persons as an association of persons, but the share of each sug person from the property shall be included in his respective total income. If any portion x the house belonging to a co-owner is occupied by him for his own residence, that portion wi be treated as self-occupied house and its annual value will be Nil, i, it will be exempt fea tex. (See. 2) (3) Composite Rent : If a building is let out to a person along with other facilities (eg. electricity, cooler, lift, water pump, etc.) for a composite rent and if the rent of the building can be separated from the rent, of such facilities, the two rents will be separated and tha belonging to the building only will be taxed under the head “Income from House Property” and that which belongs to other facilities will be taxed under the head ‘Income from Other Sources If the composite rent cannot be split up it will be taxed under the head ‘Income from Other Sources’. ANNUAL VALUE (See. 29 (A) BUILDINGS LET OUT (See. 2340) Income from house property does not mean rental income; but it means the sum for whith the building might reasonably be expected to be let from year to year. An assessee’s incom® from house property is computed on the basis of its annual value. Hence, it is very importas! to understand properly the method of determining the annual value of the house property: the annual value is not determined correctly, the taxable income from house property will ® wrong. Q Definition of the annual value ‘The annual value of a house property let out shall be deemed to be i (a) the sum for which the property might reasonably be expected to be let from yea"! ear; OF : (b) Pree the property or any part of property is let and the actual rent rece receivable by the owner is in excess of the sum referred to in (a), the amount of received or receivable; or an i (c) where the property or any part of the property is let and_was vacant during whole or any part of the previous year and owing to such vacancy the poe a received or receivable by the owner in respect thereof is less than the sum to in (a), the amount so received or receivable.n b INCOME FROM yf DETR ae “te STEPS TO Dre’ OF GROSS ANNU, ETE) ‘ JAL VALUE ‘ Step 1: Fair Rent or Municipal Value tidal Step 2: Result of Step 1 or Standard Rey Neve is higher) c, ty Step 8 : Expected Rent or Actual Regent = *bichever is lower (Expected Ret) a th y) ‘Actual To Expected Rent 'RMINE GROSS ANN, Actual Rent < Expected Rent GAV = Actual Re al Rent (Unrealised rent can be reduced from Actual Rent if conditions of Rule 4 are satisfied) Actual Rent < Expected Rent Actual Rent < Expected Rent because of vacancy because of any other factor ec GAV = Actual Rent GAV = Expected Rent Se oo Deduction of Municipal Taxes From the value determined under 7 < d (a) or (b) or (c) the taxes (ineluc service taxes) levi bby any local authority and paid by the owner during the ee Geese aoe previous year to which such taxes relate) shall be deducted in determining the annual value of the property. Generally, service taxes include water tax, sewerage tax ete. Explanation : For the purposes of clause (b) or clause (c) the amount of actual rent received ‘ar receivable by the owner shall not include, subject to such rules es may be made in this behalf, the amount of rent which the owner cannot realise. Unrealised rent shall not form part of annual value if the following conditions are satisfied ule 4) ; (i) the tenancy is bonafide; (ii) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property; (ii) the defaulting tenant is not in occupation of any property of the assessee; (iv) the assessee has taken all reasonable steps of instituting proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that Tegal proceedings would be useless. Q Determination of Expected Rent (Sec, 2301@)] (a) Where standard rent has not been fixed : One of the following (whichever is greater) shall be the expected rent of the building : : @) icici value determined by the local snatch ir es or ii) Fai Rent of similar properties in the same locality. (b) Wher Ean fa been fixed : One of the following (whichever is less) shall be athe rent of the building : (i) The value as determined under (a); or i tandard fixed under t Control Act of a State. <8) The standard ron Se an rt cnbsl ha h ankar rt180 INCOME TAX [Relevant portion of Form No. ITR-2 for the Assessment Year 2024.25) SCHEDULE HP : DETAILS OF INCOME FROM HOUSE PROPERTY ew \ isthe propertyco-wned? oes _oNo (if*VES" please enter following details) percentage of hare inthe property (%) |Name of Coowner(s) ?AN/Aadh dane Percentage Share in Property ywmer(s) P theapplicble JName()of Re Joption} [Tenant() ‘a aimed) Letout ifletout) co LTT a | Gross eat received or receivable or lettable value je amountof reat which cannotbe realized mre te \eh® HOUSE PROPERTY [income from house property 1 (If-11+ 1) (Gillup dell separatelyfor each property) jcome under the head “Income from House Property” (Ik¥2) (negative ake thefigureto 2 of schedule CLA) Teas PRI 05 nclade income of thesecied pronreferedio a Schadule SP an SE while computing the income under ths head, Q Determination of Actual Rent [Sec, 23(1X0) Sometimes the owner takes upon himself, under an agreement, the burden of certain facilities to the tenant, eg., lift, water pump, electricity, vehicle parking, gardener, In such a case, the actual rent received/receivable minus the cost of providing such faciliti# will be the actual rent.If the tenant has Sea. Sa a a toe ‘en. the obligati electricity bills of the portion occupied by the won® %f the landlord, e.g., the tenant will pay * bl " the land si pee ae fr recsivod/receivab e 0 arrive at the actual rene or the amount 80 paid will be added in rent ent wil ' Sec. ‘willbe made in the determination of actual rent regarding the (i) Tax paid by the tenant to the local (i) Repairs charges born: i (ii) Notional interest on @ Mlustration 1 Mr. X is the owner of three \@ by the tonnnt ty regarding the building occupied by him. deposit taken from the tenant, = Particulars compute the gross annual value in each ease outa | T 7 Ti : x t z JM 80,000 20,000 35,000 2 Feir Rent 36,000 24,000 32,000 3. Actual (De facto) Rent 32,000 28,000 30,000 Solution Particulars I 0 pa z = z (a) Expectedrent 1or2,whicheverisgreater| 36,000 24,000 35,000 {b) Actual rent 32,000 28,000 30,000 Gross Annual Value (a) or (b), whichever | 36,000 28,000 35,000 is greater © Ilustration 2 ‘Mr. X is the owner of four houses, which are all let out and are covered by the Rent ‘Control Act. From the following particulars compute the gross annual value in each case, ‘giving reasons for your answer : I a Ww z x % 26,000 35,000 oe 28,000 30,000 36,000 35,000 36,000 32,000 Particulars i Municipal Valueyear shall be deducted and the balance 182 INCOME TAX © Mlustration 3 ZA (a) From the following information compute Annual Value of the house properties Assessment Year 2024-25 : oF thy House Properties 1 n ml Vv z z z z v 1, Fair rent 30,000 25,000 28,000 ka! t 2. Municipal valuation 25,000 27,000 29,000 25,000 9g,.~ 3. Rent received (De facto rent) 28,800 30,000 27,600 30,000 208 4. Standard rent — — — | 24,000 age sol 5. Municipal tax Paid for Paidfor Paidfor NotPaid >, P. PY. ee 1400 0 2023-24 6 monty & & 2023-24 2024.25 2,500 5,400 5,800 6. Date of completion of construction | — = 1.10200, () The gross annual value (municipal value) of a house is % 1,00,000, Municipal tar charged @ 20% of the municipal value. However, the landlord can pay municipal tax @ 15% fg ten years in advance and in that case no tax shall be charged from him in future. Mr. X pai | or % 1,50,000 to the municipality during the previous year. Compute the annual value of the house properties. Solution (a) Computation of Annual Value of the House Properties (for the Assessment Year 2024-25) IL IL Bis z z e z t 1. Expected rent 30,000 27,000 29,000 24,000 13,000 2. Actual rent 28,800 30,000 27,600 30,000 12,00 G.AV. lor 2, whichever is greater 30,000 30,000 29,000 30,000 1300 Less : Municipal tax paid 2,500 _6,400 _—= 140 Annual Value 27,500 24,600 23,200 30,000 11,600 Notes : (1) ilding V was in existence for six months during the previous year, hence, Gross Annual Value for sx { months been considered. (2) Municipal tax paid during the previous year, whether related to the previous year or preceding yeer * the following year is deductible to arrive at the annual value. rm (b) Computation of Annual Value of the House (for the Assessment Year 2024-25) Gross Annual Value 1,00,000 Less : Municipal tax paid 1.50.00 Annual Value (-) _ 50.000 Note; When municipal tax paid by owner exceeds Gross Annual Value there can be negative annual value. Q Computation of Annual Value of a house under different situations (1) Computation of Annual Value in case of let-out house, which neither remains vaco® during any part of the previous year nor is there any unrealised rent. ‘The gross annual value shall be the expected rent or actual rent, whichever is greater. From the gross annual value, the municipal tax paid by the owner during the previ®™ shall be the annual value of the property let-out.‘Municipal value y Fair rent , Standard rent a Actual rent received 32000 uy Municipal tax 10% of Municipal Value ‘Paid Paid : aid by hye : owner tenant, » Computation of. Annual Value of the Houses mR or the Assessment Year 2024-25) \ < i @ rent 0 ® (@) Actual rent 132000 “e.000 Gross Annual Value (a) or (b), whi is 1/82,0007,20,000 Less: Municipal tax paid by cwmee ot Stealer “ino00 Ni fe Annual Value 7,22,000 (2) Computation of Annual Value in case of let-out house which remains vacant for whole ‘or any part of the previous year. (A) House remains vacant for full year : In such a case the gross annual value will be nil. (B) House remains vacant for a part of the previous year : @ Ifthe actual rent received/receivable for let-out period is more than the expected _.. Tent, the actual rent received/receivable will be the gross annual value. (Gi) If the actual rent received/receivable for let-out period is less than the expected rent owing to such vacancy the actual rent received/receivable will be the gross. E annual value. © Illustration 5 Compute the annual value of the house in the following cases : Expected rent % 1,00,000 House let-out @ 7 10,000 p.m. House tax paid by owner @ 9,000 (10% of municipal value) House remains vacant for (a) 1 month, (b) 3 months. Solution (a) Computation of Annual Value of the House (for the Assessment Year 2024-25) Actual rent for 11 months @ Pe is more z than expected rent @ 1,00, Gross Annual Value 1,10,000 Semen ter Annual Value 1,01,000 Cor tation of Annual Value of the House ar ©) Corp the Assessment Year 2024-26) Actual 9 months % 90,000 is less rent tor front 1,00,000 due to vacancy se than Gross Annual Value _ eens Annual Value 81,000 of Annual Value in case of let-out house, which does not remain vacant jised rent. eS ern ined as discussed in (1). From the gross cetions will be allowed and the balance will be the annual value :INCOME TAX a\ ‘owner to the local authority; id by the (a) Taxes actually paid Py ditions of Rule 4 are satisfied). i it (If conditior ora TR 1 Ot Gule HP : Income from House Property item b] i Dbatituted by the Finance Act, 2001, with effect ‘Sections 23 and 24 were substitut ry ri A a Lene OEE i is ‘ ‘ eaiven or the procedure will become cumbersome instead of simple. Jan ther a rule or notification notified by the Central Board of Direct Taxes is bindi lene department. Hence, computation of the annual value of a building in the manner proy ae oe in the Form (Return of Income) is valid. : © Mlustration 6 a From the following information compute the annual value of the house : z Municipal value 1,50,000 Fair rent 1,80,000 Standard rent 1,60,000 Actual rent 20,000 pm. Municipal tax paid by the owner 20% of Municipal Value Unrealised rent ¥ 40,000. Conditions of Rule 4 are satisfied. Solution Computation of Annual Value of the House (for the Assessment Year 2024-25) Me z (a) Expected rent 1,60,000 (b) Actual rent 240,000 Gross Annual Value (a) or (b), whichever is greater 2,40,000 Less : (i) Municipal tax (20% of 7 1,50,000) 30,000 (ii) Unrealised rent 40,000 _ 70,000 Annual Value —_1,70,000 (4) Computation of Annual Value in case of let-out house, which remains vacant during part of the previous year and there is unrealised rent. The gross annual value of such a house will be determined as discussed in (2). From the gros annual value the following deductions will be allowed and the balance will be the annual value: (@) Taxes actually paid by the owner to the local authority; Gi) Unrealised rent. (If conditions of Rule 4 are satisfied.) = Ilustration 7 From the following information compute the annual value of the house : ‘ Municipal value 2,00,000 Fair rent 1,80,000 Standard rent 2,50,000 30,000 p.m Actual rent ,f ‘The house remained vacant for two months during the previous year. Unrealised rent ® 30,000, Conditions of Rule daresatiatieg Municipal tax paid by the owner ® 15,000 and by the tenant ¢ 15,000. Solution Computation of Annual Value of the House (for the Assessment Year 2024-25) (a) Expected rent ® 2,00,000 (b) Actual rent (& 3,60,000 ~ 60,000 vacancy) & 3,00,000 Gross Annual Value = 3,00,000 Less : Municipal tax paid by owner 15,000 45,000 Unrealised rent we 30,000 : Annual Value 2,55,00!a INCOME FROM Hous SE PROPERTY 105 G Deductions from Net Annual Value under n Deductions all an ene e/ “tell ih 4 —_, _ Let out/deomed let ‘out property Self occupied Property/properties dard deduction Interest on borrowed capital capital Interest on borrowed ws 24(a), 30% of NAV w/s 24(b), Fully Allowed capital w/s 24(b) eT 2 where loan is taken for repair, renewal or where loan is taken for ?, NR reconstruction of 2€dUuisition or construction house property of house property y Maximum Acquisition or construction % 30,000 for one completed within 5 years from or two self occupied the end of the Financial year in properties which the capital was borrowed + Certificate from lender specifying interest payable ‘Yes No Maximum ‘Maximum % 30,000 for one 7 2,00,000 for one ‘or two self occupied or two self occupied properties properties a Deductions from Net Annual Value under section 115BAC Deductions allowed from NAV Let out/deemed let Self occupied out property property/properties Standard deduction Interest on borrowed capital No deduction is ws 24(a), 30% of NAV _w/5 24(b), Fully Allowed allowable ws 24 The income chargeable under ‘income from House Property’ (in case of let-out i nce changeble unde ene olowing deductions fra ts noel vale sam oguat fo s0% of the annual value asthe standard deduction fer expen AS,186 INCOME TAX Points to note: Se (® Standard deduction @ 30% of the annual value shall be ded expenditure is incurred or not. ne ee of i) If the owner of the house occupies more than two houses for his residential a ‘except two houses all other self-occupied house/houses are deemed as let-out. In Ek q 0? standard deduction @ 30% of the annual value shalll be allowed. “on (iii) In respect of two houses which are treated as self-occupied h a deduction is not allowed. pied house, the stanisa Note : For self-occupied house see abend. i @) eee loan eek respect of house property : Interest: on loan taken for ih of purchasing, const ing, i i Coors Lae a ee ae reconstructing or repairing the house property is allowahj, Points to note (i) Interest on unpaid interest is not deductible. (ii) Interest on a fresh loan raised merely to repay the original loan taken for the abov, purposes is allowable as a deduction under this section. a ii) Any brokerage or commission paid for raising the loan is not deductible. ‘iv) Interest for pre-acquisition or pre-construction period : Interest payable in Tespect of funds borrowed for the acquisition or construction of house property and pertaining to the period prior to the previous year in which such property has been acquired or constructed shall be deducted in five equal annual installments commencing from the previous year in which the house was acquired or constructed. The amount of interest shall not include any amount such interest allowed as a deduction under any other provision of the Act. ‘The interest for the previous years prior to the current year, which is to be deducted in five equal annual installments, shall be deducted in addition to the interest of the current year ie, the interest allowable shall be the interest for the current previous year + /sth of interest for the previous years prior to the year in which the house is constructed or purchased. COMPUTATION OF PRE-CONSTRUCTION PERIOD For calculating the interest on loan for pre-construction period it is compulsory to know the duration of such period. Pre-construction period starts from the date of loan taken up the end of financial year just preceding the year in which the construction of house property has been completed or date of repayment of loan, whichever is earlier. This aspect is explains! with the help of the following examples : 2 ERSs BE se 8GR4 O 1 Z On the basis of the following information compute the duration of pre-construction periad for calculating the interest on loan taken to construct the house property. Assume in all the cases, the loan is still outstanding. Case : Date of Loan taken (A) 1st March, 2021 (B) 31st Jan., 2022 (C) 30th Sept., 2022 (D) 15th Nov., 2021 Solution Case (A): In this case, construction of house property has been completed on 31st Me 2023. The pre-construction period will be—from 1st March, 2021 up to 31st March, 13 months. a Case (B) : In this case, construction of house property has been completed on Or 2024, The pre-construction period will be—from 31st Jan., 2022 up to 31st March, 26 months.INCOME FROM Ho} 7 stig —— USE PROPERTY 107 Case (C): In this case, construc i) nt Nias. the pre snscncie Period will eet pause Property has been completed on Bist Aug., pence }th Sept, 2022 up to Slat March, 2023 i, 9023.The preconstrwcion oa uci of house property has been completed on Ist Nov. “ fe. 164% months, “from 15th Nov, 2021 up to Bist March, 2023. 45,000 x 15, 40 months [1.6.2018-30.09.2021] 100 12 it = % 22,500 Ucted ing Interest not deductible Any interest chargeable under the Income Tax Act, which is peyable outside India on which tax has not been paid or deducted at source and in respect of which there is no person in India who may be treated as an agent, shall not be deducted in computing the income chargeable under the head ‘Income from House Property’. The object of this provision is to ‘counteract evasion of tax by the recipient of such interest. (See. 25) © Illustration 8 In the following cases compute the amount of interest deductible for the Previous Year (2023-24, assuming the loan of % 2,00,000 was taken for the construction of the house @ 12% ‘pa. and the house had been let out : Date of Borrowing Date of Completion Loan Repaid up to of Construction 31.3.2028 (a) 1.04.2016 81.12.2018 Full (b) 1.10.2017 31.03.2019 Half (©) 1.01.2019 30.06.2020 One-fourth and paid 750,000 on 1.10.2023 ___ Interest paid or payable in respect of funds borrowed for the construction or acquisition of t ean pertaining to the period prior to the previous year in which the property been constructed or acquired is allowed in praeauel annual instalments commencing from previous year in which the house was constructed or acquired. ‘santa, Further, the pi for the relevant previous year is also deductible. Keeping in view luction Previous Year 2023-24 shall be as under : . seins eatin ‘on 31.12.2018. Hence, the interest for the Previous Years 2016-17 d 2017-18 % 48,000 shall be allowed in five annual instalments as under :S ypns [8 Jo onyea fenutre oy} ‘pardna90-j[es axe Le wig huang aes ek ema eT z . yoy “reat snojaaad amp Jo 30d ‘4a 20 jogs au Sump ano-9| 04 304 plnoys 140 Hed 20 osnoy pardasoosi9s ML T "Hoga mmo © 30ed 0 amo oJ eetuoy Sueaad so oyun ermal Penson popdnae es ‘soumo oxp Jo uoryednaoo oxy ur SoGnon, cna BE apts eee mn myn gn foro : é KZIES “22 ei pe) Sood moans yom 305 sous ssovepies ean oe (@ez 98] sasoauna aspen 0 pepe enuops9s 05 LAH 20 enprapus Ue) Joo oy kq aa IWINAAISR Od ataNDDaTaS sae EE e078 16 dn waion 30 wart x Fopnat etd 20 (va ym woot uo use Se 7r (ope omen oi coves soreh rene” iwentonbey oe ema ram 00080"‘pucose ou Jo wonrmnzisuo> 9M; 20) ZzOe'y"T Uo 4) ‘say 949 JO oneBINA 155 ZZ02 VOT UO HOM WHO} “ona ‘samoney tp 05 82-420 109% woKSOesY oY} 205 Azodoxd suns Srna sven onopins Sty somo aa bana Oat a eke eo Th Or uonmssmilt «ma see oe Seen eee -ega nan irc aie ef (enyea TenuuE oy Jo %OE 04 fenba) ¥ (8)¥Z 8M UoRONpap prepuEyg : S877 soumo ou Aq pred xe} pediorunyy : s9o7 one, renmy S801) Azwjes szouopsv (a1)y 10. 1 14. 17. INCOME TAX se for his residential purposes after taking a loan in May 2929 Sane rare ree 2029.24 he paid interest on loan € 2,10,000. In computing Income Boat the deduction is allowable to the extent of : (A) 2,10,000 ) €1.00,000 (©) 75,000 (D) & 2,00, ae Interest on Loan paid prior to completion of construction of house sh owed 88 dein (A) In2 instalments for 2 years (B) In 3 instalments for 3 years (©)In4 instalments for 4 years (D) In 5 instalments for 5 years Interest paid € 1,20,000 on loan taken in the Previous Year 2025-24 for the renovation o yy cccupied house. In computing Income from House Property the deduction is allowable ae Ge 1.30,000 (B) ¢ 1,00,000 (C) © 30,000 @MNI The annual value of the vacant house property referred to in Sec. 23(2(b) shalll be : (A) Municipal value (B) Fair rent (C) Standard rent sis () Nil For income tax purposes, juse means : (A) Dwelling house (B) Building for office use (©) Godown (D) Above all are included in the house ‘The maximum deduction of interest on loan is taken for construction of house given on rent is: (A) 1,50,000 (B) 1,00,000 3 (©) 2 30,000 (D) No limit Income from the house for self business is : (A) Net profit (B) Fair rent (©) Municipal value (D) Nil X purchased a house for his residence and borrowed a loan of 7 Wie in 2015. The deduction far will be : interest when interest payable in previous year is 1,50,000 (230,000 (B)% 1,75,000 (©) 1,50,000 (D)% 45,000 ‘The annual value of self-occupied house is : (A) Municipal valuation (B) Fair rent (©) (Nil) Zero (D) Whichever is less Which house property is not charged to tax? (A) Farmhouse (B) Palace of an Ex-Ruler (©) Business Building (D) All of these (A) ® 42,000 (B) 60,000 (C) % 80,000 (D) & 1,20,000 camera value of a house property is % 40,000. Standard deduction w/s 24(a) shall be : (B) ® 10,000 (©)? 12,000 : (D) 15,000 frtears of rent received during the previous year is & 1,00,000, From this amount deduction sl (A) Zero (B) & 20,000 (C)® 30,000 : (D) & 50,000 ‘ ; sal a root oubsequent to claiming deduction realised ¥ 1,00,000, From this amount deductio® {6)" 30000 De abo00 ¢ of computation of income under the head ‘Income from House Property’ is : (A) Municipal value a enane eee be (C) Standard rent (D) Annual vale Municipal taxes to be deducted from Gross Annual Value should be : (A) Paid by the tenant during the previous year wey (B) Paid by the owner during the previous year to intr (C) Accrued during the previous year gaye (D) All of these Dubay ies clairn INCOME FROM “a A received © 60,000 as arre SOUSE PROPERTY a : ‘ars of ren} tion 25A would be : duri Sede se would be 'ng the Previous Year 2023-24. The amount taxable (0) € 40,000 (B) & 42,000 Ans. 1. (C), 2 (D), 8. (D), 4, c, mh B.D), 6, ee) 15. (C), 16. (D), 17. B), 18, (8) ) % Dy, 8 (D), 9. (C), 10. ©), 11. ), 12. (A, 18 ©), 14, (), st ep 4. eat fT of Fae Wf Eira ian tae on SST thn aloo nae £75,000 for the Assessment Yo Income from temporary hutme; Sources’. sar 2024-25 Pt OF self-occupied house property is deductible up to nts in the vacan ‘n the vacant land is taxable under the head ‘Income from Other NUMERICAL QUESTIONS 2. Long Numerical Questions 1. Mr. A is the owner of a house property whose munici i fa cipal valuation is ¢ 75,000 and fair rent is 000 (Not covered by the Rent Control Act). The construction ofthe property was commenced on Ast January, 2019 and completed on 30th April, 2020. The building comprises of three units and is let out toMr. X, Y andZ on an annual rent of € 30,000 per unit, Mr. A paid a municipal tax of 712,000 for the entire building during the previous : ing vious year. Compute the annual value of the house if Mr. Xand Yhave taken their units for residential purposes. and Mr. for his business Ans. panel Value of the house is t 78,000. ey 2 Mr. Ais the owner of house property in Delhi. The construction of the property was completed on 30th November, 2020, The property consists of 4 units. Actual rent seccred for each nit 18 7 48,000 per annum. Standard rent of the property under the Delhi Rent Control Act is % 2,20,000. Municipal valuation of the property is ¥ 1,65,000. Rent of a similar property in the same locality is %2,00,000. Municipal taxes paid for the whole house by Mr. A during the previous year is ¢ 35,000. Three units are let out for residential purposes and one for professional purpose. Compute the annual value of the property for the Assessment Year 2024-25. (62) Ans. Gross Annual Value % 2,00,000—Municipal Tax paid ¢ 35,000 = @ 1,65,000 (Annual Value). 3. Compute the net Annual Value from the following information : i A B c D z z z z i ici 60,000 48,000 36,000 96,000 a Pare peal ean 75,000 60,000 45,000 —_1,16,000 ii) Actual rent 69,000 54,000 40,000 __1,20,000 (iv) Standard rent — 72000 42,000 1,15,000 (v) Municipal taxes paid 6.000 4200... 600... 9.600 Ans. Net Annual Value : A & 69,000; B € 55,200; C % 38,400: D & 1,10,400. 4. From the following information compute the annual value of the house : . 4,00,000 Municipal value son Se rd 4,50,000, vent '50,000 p.m. di i ing the previous year. ‘The building remained vacant for two months during t Unrealised rent € 50,000. Conditions of Rule 4 are satisfied. Municipal tax paid by the owner € 25,000 and by the tenant & 25,000 ‘Net Annual Value : € 4,25,000INCOME TAX 208 8. 10. 11. Its annual letting value is € 80,000. During the previous ” ” ‘5. Mr. Ram owns a house props‘monthly rent of € 7,000, He claimed the following expenses it was let out to a tenant on a mont eurred by him : x (i) Municipal taxes © 8,000. eee Gi) Expenses for the recovery of rent of € 600. Oro reas Gii) Maintenance Allowance paid to the step-mother € 12,000 annually which was a cond the property according to his father's will. ; : ‘The house remained vacant for one month during the previous year. Compute the income jy. house property for the Assessment Year 2024-25, fr Ans. Income from House Property € 48,300. ; 6. Mr. Joseph owns a house which is let out for residential purposes. The construction ofthe hoy, mpleted in June 2020, The annual letting value of the house is ¢ 96,000. Municipal paid € 20,000. He spent & 24,000 on white washing. On 1.4.2018 he had borrowed @ 30,000, a note at 12% interest and spent it on the construction of the house. Nothing has been repaid git this loan so far, Mr. Joseph earns a salary of € 20,000 per month. He has a scooter for going tnt office and spends for petrol, etc., on an average & 1,000 per month. Compute his Income from Hus Property and also his Total Income for the Assessment Year 2024-25. ry Ans. Total Income : Income from House Property ¢ 48,160 + Income from Salaries % 1,90,099 © 2,38,160. Note : Interest for the period preceding the previous year in which construction is completed, is in 5 instalments. Hence, interest for the previous years 2018-19 and 2019-20, one-fifth of ? 7.345 (© 1,440) shall be deducted in the Previous Year 2023-24. Further interest for the Previous Year 2023.4, © 3,600 shall also be deducted. Mr. A is the owner ofa house in Mumbai completely let out for residential purposes, consisting ‘two flats of different sizes. They are let out at % 5,000 p.m. and % 7,000 p.m. respectively. Mi value of the house is € 96,000. The rate of municipal tax is @ 15% p.a. The other particulars of tie house are as under (a) The house is newly constructed, construction was completed on 1st April, 2019. (b) Interest on loan of % 1,00,000 taken on 1.4.2016 @ 10% p.a. to construct the house, s % 10,000 for the year. Interest for the preceding three years was also paid but not claimed a a deduction. (©) The second flat was vacant for 3 months during the year. (@) Collection charges claimed by him were ® 700 but actual expenses were € 500 for the yesr Compute his income from house property for the Assessment Year 2024-25. (60 Ans. Ist Flat Annual Value ® 54,000; 2nd Flat Annual Value % 54,600; Taxable Income from House Property 60,020. Hint : Municipal taxes have been apportioned between the two flats in the ratio of their rental income, ie., 5 : 7. Compute taxable income from house property from the following particulars : % Fair Market Rent Z 80,000 Actual Rent Received 72,000 Municipal Valuation 50,000 Standard Rent 60,000 Municipal Taxes 20% Interest paid 19000 (68) Ans, Taxable Income from House Property & 25,400, a . M started the construction of his house on 1.6,2016 and for this, he took a loan of € 2,00 @ 13.5% from bank. He took another loan of & 6,00,000 @ 13% pa. on 14.2019 to complete th house. The construction was completed on 30.11.2019 and was selfcccupied from 1.12.2019. Compute his income from house property for the Assessment Year 2024-25, o Ans, Loss from House Property €1,20,300, started the construction of a house on 1.6,2020 and took a loan of & 15% per anno He took another loan of 9,00,000 @ 18% per annum on Laduege temtrmege a construction was completed on 30.11,2023 and was self-occupied from 1.12.2023. Compute his income from house property for the Assessment Sania at Ans. Loss from House Property € 2,00,000. a Mr. P. Mishra owns a house property which is given on rent, For the Previous Year 2022-25 claims a deduction of € 50,000 on account of ‘unrealised rent’, out of which the Assessing 01fs f . On 10th Au eat it (a) reso 0 full and final payment Hoe moo2? ME. Mishra recovers some money from £10,000 (expenses of recovers ty & €:000 (expenses of recover Yoo a able out of recovered $18,000). Y 18 € 8,000), (c) recovered amount ie Cinoy? % recovered amount is Ans. Taxable Amount : (a) Nil; (6) & 1,400; (c)€ 4,000, eae eageee Compute the income from hou 1h pair rent "use Property from the following information : Lat-out house Standard rent ‘Municipal tax paid @ 20% of Munici Previous Year 2022-93" /™icipal Value Previous Year 2023-24 the Previous Year 2023-24 % 20,000, (ii) Expenditure incurred on collecti n collecting unreal Gv), Arrears of rent received during te orosiee tee See Ane aoe ee House Property 2 57,400. 18. Mr. Harish Saxena is a member of Housing Co-operative Society i : -operativ in Delhi and resi the portion of the house under Hire-Purchase Scheme of the society. ‘The wali ‘alt portion is let out ,000 p.m. The fair rental value of the house assessed by the corporation is t 30,000 per annum. Local taxes paid in respect of the house amount to & 12,000, Expenses incurred include fire insurance premium % 400 and ground rent % 400. Interest payable to society is ¢ 16,000. Lee of Mr. Saxena is = 3,24,000. Compute his total income for the Assessment Year a (6.1 Ans. Loss from House Property € 3,400, Total Income & 3,20,600. i 14, Mr. X owned two buildings in Chennai City. Details relating to the properties are given below : z Building I (used as a residence) Annual rental value 1,45,000 Taxes paid "98,000 Repairs—Actual ‘40,000 Building II Rent collected for 12 months @ 4,000 per month 48,000 Taxes paid 12,000 Interest paid on the Mortgage loan on building 5,000 ‘The Mortgage loan was € 50,000 and it was used as follows : Remodelling Building No. II for getting a higher rent 25,000 Advanced to Firm XYZ, where Mr. X is a partner, free of interest 20,000 Personal use and meeting cost of education of son 5,000 You are requested to compute the income from house property of Mr. X for the Assessment Year 2024-25. ‘Ans. Income from House Property Bldg. I Nil; Bldg. II © 22,700; Income from House Property . ‘half interest on the loan for Building Il is admissible. Sanaesone sie ‘npur (Municipal value % 30,000) of the fair rent of € 36,000 p.a. 15. Mr. Ram Nath owns a house at Kanpur. ,000) o 4 i ious Year 2023-24 the house is let out for residential Purpose on a monthly rent Bet abe ree te Apel 203 to 30th June, 2023 and self-occupied for residential purpose for the ae es 00. and Cli ici 6,000 ol d ssn wate nor ee en ag completed on 1st January, Ray 7 10,000 was pe os na as a ti Pan} March, 2024) during the previous year when it was idential purpose. The ‘second unit’s half portion is usedINCOME TAX AN 210 by Mr, Naresh Kumar for the purpose of his profession, wit ne rare Po is own residence for full year. His expenses regarding the Nols? ore cipal h ‘unicipal value of which is € 90,000 and fair rent LT cpa ya yaed by hm for his own residence from pm, from st July, 2023 for resi- dential furing the previous year si js) __Atborrowed ® 8,00,000 on 1-7-2020 from L,1.C. @ 129 pa. to cons ' of the house was completed ie June 30, 2022. “i ca i ea evel ‘Afor the Assessment Year 2024-25 on he assumption that ite al a Mr, Abhishek: owns ¢, Deg te previous year the . During 28 and is let out € 8,000 : incurred re tnsuance ‘pec itum ® 4,000, Land Revenue & 4,500 and oan of € 40,000 @ eg interest per annum for the construction of re apleted on Sist March, 2021, No amount (6.25) for the Assessment Year 2024-25.—— 212 26. Dr. Piyush ‘Trivedi constructed © big, Pe a the INCOME TAX July 2013, municipal valuation of HY Rent Control Act is € 90,000 annie “e ted a big house i ‘annum, whl " £80,000 per ant fallowing manner during the previous your (a) 25% portion for en tion for self office; Oise: Portion let out for residential purpose (€ 2,000 pm) (d) 25% portion let out to a commercial frm (© 2,000 p.m.). cul ows ‘ Other particulars ofthe hou as Ap atual payment during the Previous Year 2025-24" pq, Gi). Repairs € 4,500; , Gii) Ground rent € 6,800; , () Annual charge & 4,000 (created by will by his father); (W). Fire insurance premium & 2,000; (vi) Rent collection charges & 1,500. He had taken a loan from housing board to construct the house @ 12% per annum of & 2 lay, Interest was due ® 24,000 during the previous year. Out of which € 20,000 was paid. Compute income from house property for the Assessment Year 2024-25. 625 Ans. Income from House Property € 12,450. : X owns a house at Delhi. During the Previous Year 2023-24, 3/4th portion of the house is se, * Sccupied for a full year and 1/4th portion is let out for residential purposes from Ist April, 29, to 31st December, 2023 on a rent of % 700 p.m. From 1st January, 2024 this portion was used fy ‘own residence. Municipal valuation of the house is % 20,000 and fair rent % 24,000. He incurs tig following expenditure in respect of the house property : Municipal Taxes € 6,000; Repairs € 2,000. * A loan off 1,00,000 was taken on 1st April, 2020 @ 10% p.a. for the construction of the house whic was completed on 31st March, 2021. Nothing was repaid on loan account so far. ‘Compute his income from house property for the Assessment Year 2024-25. (2 Ans. Loss from House Property 7 6,640. Shri Mohan is a Sales Tax Officer at Jaipur. He owns two residential houses. ‘The first house is at Delhi. It was constructed on 31st Dec., 2013. He has let out it at a rent of % 3,000 per month tox company for its office. The second house is at Jaipur. Its construction was completed on 1st March, 2023 and has been occupied by him for his own residence since 1st June, 2023. He took a loan 7 60,000 on Ist August, 2021 at 12% per annum interest for the purpose of construction of ths house. Other relevant particulars in respect of these houses are given below : 1st House z 24,000 10% 1,150 200 175 1,000 Wages of Gardener (per month) 100 ea neeey on Loan pal : - Sui ground rent of Delhi house, municipal tax and building tax of Jaipur house are unpai Mohan was transferred to Udaipur on 1st Dec., 2023 where he reuiieat i a house at beer rent of & 4,000 and his house at Jaipur was let out on the same day at a rent of & 2,000 per mont ‘Compute the income from house property of Shri Mohan for the Assessment Year 2024-25. (638 ‘Ans. Income from House Property : I House € 23,520; I House & 4,440. ‘S’ is the owner of 4 houses. The frst house i It to a tenant for & 3,000. second house, municipal valuation of which is € 4,500 p.a., is in his own, atid ‘The third house remained vacant throughout the whole year as it wes not in rentable eondlti® ‘The fourth house, municipal valuation of which is € 6,000, is used by‘S' for his business. His expenses in respect of these houses are as follows 1. Interest on loan is taken to repair from the own residential house “ 2, Fire insurance premium for 1st, 2nd and 4th house sonny, sald 8. Collection charges SL NS BakiBn Se 3 4. Ground rent in respect of 2nd house om % ee \ eINCOM! ik FROM HOUSE PROPERTY 213 The first house, which is | i Gompute S's income from house proseere ant 2" #0 months, Masti ria owas two Rouse wae Ae (6.29) ee blew: *. The particulars of the two houses for the Previous Year 2023-24 are Particulars ‘Date of completion of the house House I House II Use of House Bist March, 2019 Bist Dee., 2020 Self-oceupied ‘Let out ‘Municipal Value Ront Received Standard Rent Srepicipal taxee paid Interest on loan for construction of house 30,000 ‘Compute Income from house for 4 Gompate Income fem house property fr the Asesement Year 202425. Mr. Kumar uses two houses for his residential purposes, The following information are related to these: House I House Il . 60,000 30,000 32,000 10% Loan for house construction Date of loan Rate of interest Interest Date of completion 303.023 Compute Mr. Kumar's income from house property for the Assessment Year 2024-25. ‘Ans. Loss from House Property % 1,41,600. 92. Four persons are co-owners of property in equal shares. The property was constructed in 2018. Guefurth property is self-occupied by the co-owners and the remaining three-fourth is let out. The let out portion fetches rent of & 1,80,000 per year. Ths letting value of the property as per municipal records is T 2,00,000. Municipal tax, of 746,000 iz borne and paid by the owners, The co-owners also paid 2,000as fire insurance prensiso- Compute the income from the house property. (632) ‘Ans. Income from House Property ® 1,17,600; Each person € 29,400. 4 $8. Ma Xand'V having equal share are co-owners of a house property consisting of four identical units. ae ee nar aied one unit each for their residence and the other tro units are let ows st as i i por unit, The municipal value of the house property is < 2,00,000 and the municipal taxes are 10% of such muni pal value, which are paid by the assessee during the year ‘The other expenses were as follows z 631) Ground Rent Interest is taken for a house for the year ; i LE oe eee units, one unit remained ‘vacant for five months during the previous year. the let out ania, one property for both persone forthe Assesment Year 202425; "House Property & 10,250; Mr. ‘Y's Loss & 10,250. in Agra. Its particulars are as follows : 4.2028 to 30.6.2023 and let it out paid Municipal Taxes & 20,000 in the ‘Mr, Sharma ‘year (before the previous year). Compute Income 2024-25. kes)