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INCOME FROM HOUSE PROPERTY

Conditions for taxing Income under the head “House Property” [Sec. 22]
1. Annual Value: The basis of chargeability of Income under the head Income from House
Property is Annual Value.
2. Property:
(a) The Property must consist of Building or Lands Appurtenant thereto.
(b) Building includes not only Residential Building, but also Factory Building, Offices,
Shops, Godowns and other Commercial Premises.
(c) Land Appurtenant means land connected to building, like garden, garage, etc.
[Note: Income from letting out Vacant Land is taxable under the head “Income from
Other Sources”.]
3. Owner: The Assessee must be the owner of such property.
(a) An Owner is a person who is entitled to receive Income from the Property in his
Own Right. The requirement of registration of the sale deed is not warranted.
(b) Ownership includes both Free-hold and Lease hold rights.
(c) Ownership includes Deemed Ownership (Sec.27).
(d) The person who owns the Building need not also be the Owner of the Land upon
which it stands.
(e) The Assessee must be the Owner of the House Property during the P.Y. It is not
material whether he is the owner in the A.Y.
(f) If the title of the Ownership of the property is under dispute in a Court of Law, the
decision as to who will be the owner chargeable to tax u/s 22 will be that of the Income
Tax Department till the Court gives its decision on the matter.
4. Purpose: The property may be used for any purpose other than the Assessee’s
Business or Profession.

Property held as Stock in Trade

1. Stock in Trade: If the property constitutes Stock-in-Trade of a business or the business of
the Assessee is to let- out house properties, the Income is to be charged only under the head
“Income from House Property”.
2. Exceptions:
(a) Letting out is a supplementary to the main business: If the property is let out with the
object of carrying on the business of the Assessee in an efficient manner, then Rental Income
is taxable as Business Income. Deductions or allowances have to be calculated as relating to
Profits/Gains of Business, and not relating to House Property.
(b) Letting out of Building along with other facilities: Income from such Building along with
facilities cannot be treated as Income from mere Ownership of House Property, and hence
Assessable as Business Income.

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Composite Rent
1. Meaning: Composite Rent is the rent charged in cases where the assessee does not merely
let-out a property, but also provides other facilities like Furniture, Plant & Machinery, Lift,
Security, Power Backup, etc.
2. Objective of letting out: If from agreement between two parties, it is clear that primary
object was to let out portion of a property with the additional right of using Furniture, Fixtures
and other common facilities, then Rent charged from month to month is income derived from
said property, and is assessable as Income from House Property. [Shambhu Investment (P)
Ltd 129 Taxman 70 (SC)]
3. Tax Treatment:
(a) Separately identifiable: Where building is let-out along with Plant & Machinery and
amenities, and the income towards Building and Other Assets are separately identifiable,
then Income from Building shall be taxed under the head “Income from House Property” and
the Other Income shall be taxed under the head either “Profits and Gains of Business or
Profession” or “Income from Other Sources”.
(b) Not separately identifiable: If such Income is inseparable, it will be charged to tax under
the head “Income from Other Sources”. [Sultan Bros. (P) Ltd 51 ITR 353 (SC)]. When the
other party does not accept letting out of buildings without other assets, then the rent is taxable
either as Business Income or Income from Other Sources. This is applicable even if sum
receivable for the two lettings is fixed separately.

Other Special Aspects

Issue Treatment

Club In case of Property owned by a Club, the Annual Value of the Clubhouse is not
chargeable to tax because of Principle of Mutuality.

Real Estate For a Company in Real Estate Business, with the object of buying and
Business developing landed properties, the Income from unsold property let-out is
taxable under the head “Income from House Property”.

Rent from Rent received from Employees’ Residential Quarters, Rent received from part
Residential of the premises let-out to Government for locating Branch of a Bank or Post
Quarters Office or Railways to carry on business smoothly, is taxable as income under
the head Profits and Gains of Business or Profession.

Sub-letting If sub-letting is in the ordinary course of business, such Income is taxable under
the head Profits and Gains of Business or Profession. Otherwise, it will be
taxable under the head “Income from Other Sources.”

Hotel or If the Assessee does not merely let-out a property, but also provides other
Lodging facilities, it is on par with activity of a Hotel or Lodging House & hence shall
House be recognized as a Business Activity.

Motive to As per MOA of the Company, if the objective of the Company is to acquire
earn property and to earn Income, then such Income is assessable under Profits and
Income Gains from Business or Profession.

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Owner and Deemed Owner (Sec.27)

1. Owner: An Individual shall be considered as owner of a Property, when the document of
title to the property is registered in his name. [Also refer Point 3 of Para 5.1.1]
2. Deemed Owner: In the following circumstances, Income from House Property is taxable in
the hands of the person, even if the property is not registered in his name -
(a) Where the Property has been transferred to Spouse, for inadequate
consideration, other than in pursuance of an agreement to live apart.
(b) Where the Property is transferred to a Minor Child, for inadequate consideration,
(except a transfer to Minor Married Daughter).
Note: Where cash is transferred to Spouse/Minor Child, and the Transferee acquires
property out of such cash, then the Transferor shall not be treated as Deemed Owner
of the House Property. Provisions of clubbing u/s 64 will be attracted in such case.
(c) Where a Person holds an Impartible Estate.
(d) Person is a Member of Co-Operative Society, Company, or other Association, and
has been allotted a House Property by virtue of His being a Member, even though the
property is registered in the name of the Society / Company / Association.
(e) Where a Person is allowed to take or retain possession of any building or its part,
as part-performance of a contract u/s 53 A of the Transfer of Property Act, 1882.
(Possession of the Property is given to the Person, but the Title Deeds have not yet
been transferred, i.e. Registration not yet completed.)
(f) Where a Person is a Holder of Power of Attorney enabling the right of possession
or enjoyment of the property.
(g) Where the Property has been constructed on a Leasehold Land.
(h) Where the ownership of the Property is under dispute.
(i) Where the property is taken on a lease for a period of not less than 12 years, then
the Lessee shall be deemed as the Owner of the property.(Except any rights by way
of lease from month to month or for a period not exceeding one year.)
Important Practical Issues

The House Property is owned by the Assessee, but it is used by the Firm in which he is a
Partner, and he has not derived any benefit from the Firm. It is deemed that the Partner is
using the property for his own business, and hence not taxable under Income from House
Property.

Where the Property is owned by HUF, but used by the Firm in which all the Members are
Partners, Property Income shall be assessable in the hands of HUF as House Property.

Where IT Authorities found that the Assessee had leased out his property to his own family
members to show lesser income in his hand and family members had in turn sub-leased it to
outsiders on much higher rentals, Assessing Authorities could tax the said income in hands
of the assessee.

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Illustration - Leasehold Land - M 13

In the following case, state the head of income under which the receipt is to be
assessed and comment.
X has built a house on a Leasehold Land. He has let-out the above property and claims
such Income from Property is taxable as "Income from Other Sources", and deducted
Expenses on Repair, Security Charges, Insurance and Collection Charges, in all
amounting to 40% of receipts.
1. U/s 27 Deemed Owner (Mr. X) is liable to tax, under Income from House Property.
2. Since it is chargeable under the head House Property, deduction u/s 24 alone can be
claimed and no other deductions are allowed.

Standard Deduction u/s 24(a)

1. Deduction to an extent of 30% of Net Annual Value (NAV) is allowed as a Standard
Deduction from the House Property used as a Let-Out Property or a deemed Let-Out Property.
2. No other expenditure towards Insurance, Repair, Ground Rent, Collection Charges, etc
shall be allowed as deduction.

Interest on Borrowed Capital

Sec. 24(b) permits deduction for Interest on Borrowed Capital. The principles are as under -
1. Purpose of Loan: The Loan shall be borrowed for the purpose of acquisition,
construction, repairs, renewal or reconstruction of the House Property.
2. Accrual Basis: The interest will be allowed as a deduction on accrual basis, even though
it is not paid during the financial year.
3. Certificate: The Assessee should furnish a certificate from the person from whom
the‘amount is borrowed, specifying the amount of Interest.
4. Inadmissible Items:
(a) Interest outside India without TDS: Interest payable outside India without
deduction of tax at source and for which no person in India is treated as an agent u/s
163 shall not be an allowable expenditure [Sec. 25].
(b) Interest on Interest: Interest on unpaid interest shall not be allowed as a
deduction.
(c) Brokerage: Any Brokerage or Commission paid for acquiring the loan will not be
allowed as a deduction.
5. Interest on Fresh Loan to repay existing loan: Interest on any Fresh Loan taken to repay
the existing loan shall be allowed as a deduction.
6. Prior Period Interest: Interest includes Prior Period Interest also. Prior Period Interest shall
be allowed in 5 equal installments commencing from the Financial Year in which the
property was acquired or construction was completed.

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Illustration - Interest & Prior Period Interest -M 00

Arvind commenced construction of a residential house intended exclusively for his
residence, on 01.11.2022. He raised a loan of ₹ 7 Lakhs @ 16% Interest for the purpose
of construction on 01.11.2022. Finding that there was an overrun in the cost of
construction he raised a further loan of ₹ 10 Lakhs at the same rate of interest on
01.10.2023. What is the interest allowable u/s 24, assuming that the construction was
completed on 31.03.2024?

Self Occupied House Property or Self Occupied Property kept Vacant

1. Scope: This covers - (a) Self Occupied House Property, or (b) Self Occupied Property kept
vacant by the Assessee due to employment or carrying on Business or Profession in any other
place, and the Assessee occupies any premises not owned by him in the other place.
2. Benefit of Exemption: The Benefit of Exemption of one Self-Occupied House is available
only to an Individual/HUF. No deduction for Municipal Taxes is allowed in respect of such
House Property.
3. Conditions: The following computation shall be made only if the conditions given below
are satisfied -
(a) The property was not let out for any part of the previous year.
(b) No other benefit is derived from the property.

Particulars ₹

Annual Value u/s 23(2) NIL

Less: Deductions u/s 24

(a) Interest on Housing Loan upto a maximum of ₹ 2,00,000:
Conditions:
• Loan taken for acquisition or construction of one or two House Property(s),
• on or after 01.04.1999
• Acquisition or Construction should be completed within 5 years from the end of the
financial year in which capital was borrowed

[OR] xxxx

(b) Interest on Housing Loan upto a maximum of ₹ 30,000:

Situations:
• If any of the above conditions in (a) is not satisfied or
• If Loan is taken for repair, renovation or reconstruction at any point of time.
Note: However, Aggregate Interest on borrowed Capital allowable under (a) and (b)
cannot exceed ₹ 200,000.

INCOME FROM HOUSE PROPERTY (xxxx)

Note: The deduction u/s 24 in respect of self-occupied or vacant property referred in sec. 23(2)
is not allowable for assessees who avails the benefit u/s 115BAC.

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More than two House Property Self-Occupied [Sec. 23(4)]

1. Two House Property at the option of the Assessee, can be treated as self-occupied,
and Income from that Property shall be computed as explained in Para 5.4.1 above.
2. For all other properties self-occupied, Income shall be calculated as deemed let-out.
Illustration - Evaluation of Beneficial Option - M 10
Mr. Mahesh has three flats at Chennai, all the houses were self occupied, the particulars
of which are provided below (in ₹)

Particulars Flat I Flat II Flat III

Municipal valuation 3,00,000 3,60,000 3,30,000

Fair Rent (Rent which similar property would 3,75,000 2,75,000 3,80,000
fetch)

Standard rent 3,50,000 3,70,000 3,75,000

Municipal taxes paid 12% 8% 6%

Date of Completion/ Purchase 31.03.2022 31.03.2022 01.04.2023

Interest on loan for Repairs of property during the 55,000 “

Current year

Current year Interest on loan borrowed in July 1,75,000

2013 for Purchase of property

You are required to advise Mr. Mahesh which flats can be treated as self-occupied and
the other deemed to be let out in a manner beneficial to him.
Illustration - Computation of Income from House Property - M 17
Mr. Ganesh owns a Commercial Building whose construction got completed in June
2022. He took a Loan of ₹ 15 Lakhs from his friend on 01.08.2021 and had been paying
Interest calculated at 15% per annum. He is eligible for Pre-Construction Interest as
deduction as per the provisions of the Income Tax Act.
Mr. Ganesh has let out the Commercial Building at a monthly rent of ₹ 40,000 during the
financial year 2022-2023. He paid Municipal Tax of ₹ 18,000 each for the financial year
2022-2023 and 2023-2024 on 01.05.2023 and 05.04.2024 respectively.
Compute Income under the head 'House Property' of Mr. Ganesh for the Assessment
year 2024-2025.

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Illustration - Determination of Annual Value - M 12

Mr. Vaibhav owns 5 houses at Cochin. Compute the Gross Annual Value of each House
from the information given:

Particulars House -1 House - II House - III House - IV House - V

Municipal Value 1,20,000 2,40,000 1,10,000 90,000 75,000

Fair Rent 1,50,000 2,40,000 1,14,000 84,000 80,000

Standard Rent 1,08,000 NA 1,44,000 NA 78,000

Actual Rent received / 1,80,000 2,10,000 1,20,000 1,08,000 72,000

receivable

Deduction for Unrealized Rent [Rule 4]

Unrealised Rent means the rent not paid by the Tenant and realised by the Owner. Unrealised
Rent shall be deducted from the Actual Rent Receivable from the Property before computing
income from that property, provided the following conditions are satisfied -
1. The Tenancy is bonafide.
2. The defaulting Tenant should have vacated the property, or the Assessee has taken steps
to compel the defaulting Tenant to vacate the property.
3. The defaulting Tenant is not in occupation of any other property owned by the assessee.
4. The Assessee has taken all reasonable steps for recovery of Unrealised Rent, or
satisfies the Assessing Officer that such steps would be useless.
5. The Unrealised Rent shall be reduced from the Actual Rent while determining Actual Annual
Value.

Recovery of Unrealized Rent [Sec. 25A]

1. Chargeability: Recovery of Unrealized Rent is chargeable to tax as “Income from House
Property”.
2. Year of Receipt: Unrealized Rent recovered to the extent which has not been included
in the annual value earlier, is taxable in the financial year in which it is recovered.
3. Ownership not a condition: It will be taxable in the hands of the Assessee, even if he does
not own the property to which such rent pertains.
4. Deduction: 30% deduction will be allowed against such receipt / recovery of Unrealised
Rent.

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Illustration - Self Occupied and Let Out Property - Vacant for part of the year - N 08
Mr. X owns one residential house in Mumbai. The house is having two units. First unit
of the house is self occupied by Mr. X and another unit is rented for ₹ 8,000 p.m. The
rented unit was vacant for 2 months during the year. The particulars of the house for
the Previous Year 2023-2024 are as under -

Standard Rent ₹ 1,62,000 p.a. Municipal Valuation ₹ 1,90,000 p.a.

Fair Rent ₹ 1,85,000 p.a. Municipal Tax = 15 % of Municipal Valuation

Light and Water Charges ₹ 500 p.m. Interest on Borrowed Capital ₹ 1,500 p.m.

Lease Money ₹ 1,200 p.a. Insurance Charges ₹ 3,000 p.a.

Repairs ₹ 12,000 p.a.

Compute Income from House Property of Mr. X for the Assessment Year 2024-2025.

Illustration - Income from House Property - N 13

Mr. Krishna owns a Residential House in Delhi. The House is having two identical units.
First Unit of the House is self-occupied by Mr. Krishna, and another unit is rented for ₹
12,000 p.m. The rented unit was vacant for three months during the year. The particulars
of the house for the previous year 2023-2024 are -

Standard Rent ₹ 2,20,000 p.a.

Municipal Valuation ₹ 2,44,000 p.a.

Fair Rent ₹ 2,35,000 p.a.

Municipal Tax paid by Mr. Krishna 12% of the Municipal Valuation

Light and Water Charges ₹ 800 p.m.

Interest on Borrowed Capital ₹ 2,000 p.m.

Insurance Charges ₹ 3,500 p.m.

Painting Expenses ₹ 16,000 p.a.

Compute Income from House Property of Mr. Krishna, for the Assessment Year 2024-
2025.

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Property Self-Occupied for part of the year & let-out for part of the year
Income from House Property shall be calculated for the Whole Year as DEEMED LET-OUT
PROPERTY -

Portion of House Property Self-Occupied and another Portion Let-out

1. Income of each portion shall be computed separately, as if the let-out portion were Let-out
Property, and the Self- Occupied portion were Self-Occupied Property.
2. There is no need to treat the property as single unit for the purpose of computation of Income
from House Property.
3. Fair Rent, Municipal Rent, Standard Rent, Property Taxes and Interest accrued shall be
apportioned between the let-out portion and self-occupied portion either on plinth area or
built-up floor area or any other reasonable basis.

Illustration - Portions Self Occupied & Let out - N 12

Mr. Vikas owns a House Property whose Municipal Value, Fair Rent and Standard Rent
are ₹
96.000, ₹ 1,26,000 and ₹ 1,08,000 (per annum) respectively. During the Previous Year
2023-2024, one-third of the portion of the house was let out for residential purpose at a
monthly rent of ₹ 5.000. Remaining two-third portion was self-occupied by him.
Municipal Tax @ 11% of Municipal Value was paid during the year.
The Construction of the House began in June 2014 and was completed on 31.05.2018.
Vikas took a Loan of ₹ 1,00,000 on 01.07.2015 for the Construction of Building. He paid
Interest on Loan @ 12% p.a. and every month such interest was paid.
Compute Income from House Property of Mr. Vikas for the Assessment Year 2024-2025.

Annual Value of House Property held as Stock in Trade - Sec.23(5)

1. Nature of Property: Property consisting of any Building / Land appurtenant thereto, held
as Stock in Trade.
2. Condition: Property or any part of the Property is not let out during the whole or any part
of the PY.
3. Annual Value: Annual Value of that property or part of the property, for the period upto 2
years from the end of the FY in which the certificate of completion of construction of the
property is obtained from the Competent Authority, shall be taken as NIL.

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Co-Ownership [Sec. 26]

When a House Property is owned by two or more persons, the income from such property
shall be determined in the following manner -

Share of each Co- Mode of Computation

Owner of the
property is

Definite and • Share of each Owner in the Income of the Property will be taxed in
Ascertainable his Individual assessment according to the nature of occupancy.
• If the property is self-occupied, then the part of self occupancy is
applicable to each Co-Owner individually, and they are entitled for
deduction u/s 24 independently.

Not Definite Income from House Property will be determined and charged to tax
in the capacity of an AOP.

Note: Property owned by Partnership Firm - Where immovable property(ies) is included in

the Assets of a Partnership Firm, the Income from such property should be assessed in the
hands of the Firm only. Such Property Income cannot be assessed as Income of the individual
partner in respect of his Share in the Firm.

Illustration - Co-Ownership - N 12
Two brothers Arun and Bimal are Co-Owners of a House Property with equal share. The
property was constructed during the Previous Year 1998-1999. The property consists
of eight identical units and is situated at Cochin.
During the Previous Year 2023-2024, each Co-Owner occupied one unit for residence
and the balance of six units were let out at a rent of ₹ 12,000 per Month per unit. The
Municipal Value of the House Property is t 9,00,000 and the Municipal Taxes are 20% of
Municipal Value, which were paid during the year. The other expenses were as follows:

Particulars ₹

Repairs 40,000

Insurance premium (paid) 15,000

Interest payable on loan taken for construction of house 3,00,000

One of the Let - Out units remained vacant for four months during the year.
Arun could not occupy his unit for six months as he was transferred to Chennai. He
does not own any other house.
The Other Income of Mr. Arun and Mr. Bimal are ₹ 2,90,000 and ₹ 1,80,000 respectively
for the Previous Year 2023-20243.
Compute the Income under the head Income from House Property and the Total Income
of two brothers for the Assessment Year 2024-2025

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Illustration - Co-Ownership - N 09

Mr. Raman is a Co-Owner of a House Property along with his brother.

Municipal Value of the Property ₹ 1,60,000

Fair Rent ₹ 1,50,000

Standard Rent under the Rent Control Act ₹ 1,70,000

Rent Received 15,000 p.m.

The loan for the construction of this property is jointly taken and the interest charged
by the bank is ₹ 25,000 out of which ₹ 21,000 have been paid. Interest on the unpaid
interest is ₹ 450. To repay this loan, Raman and his brother have taken a fresh loan
and interest charged on this loan is ₹ 5,000.

Municipal Taxes of ₹ 5,100 have been paid by the Tenant.

Compute the Income from this house property chargeable in the hands of Mr. Raman
for AY 2024-2025.

Principle: Shares of the each co-owner is not given. If share of each Co-Owner of the property
is not definite, then Income from property will be determined and charged to tax in the capacity
of an AOP (Sec. 26).

Property situated outside India

Status of Individual Taxability

Resident Ordinarily Resident Taxable in India.

Not Ordinarily Resident / Non- If the Rent is first received in India, then Income shall be
Resident taxable in India.

Note: Income accruing or received in Foreign Currency should be converted into Indian
Rupees in TT Buying Rate on the last day of the previous year. [Rule 115]

Any tax or expenditure incurred towards earning such R Venugopal Reddiar 58 ITR 439
income shall be allowed as a deduction. (Mad.)

Illustration - Indian & Foreign Property - N 09

Mrs. Indu, a Resident Individual, owns a house in USA. She receives rent at $ 1,500 per
month. She paid municipal taxes of $ 1,125 during the Previous Year 2023-2024. She
also owns a two storied house in Mumbai, Ground Floor is used for her residence and
First Floor is Let Out at a monthly rent of ₹ 10,000. Standard Rent for each floor is ₹
11,000 per month. Municipal taxes paid for the house amounts to ₹ 7,500. Mrs. Indu had
constructed the house by taking a loan from a nationalized bank on 20.06.2022. She
repaid the loan of ₹ 54,000 including interest of ₹ 24,000. The Value of one dollar is to
be taken as ₹ 60.
Compute Total Income from House Property of Mrs. Indu.

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Illustration - Indian & Foreign Property - Beneficial Option to Assessee - M 09

Mrs. Rohini Ravi, a Citizen of the USA is a Resident and Ordinarily Resident in India
during the Previous Year 2023-2024. She owns a House Property at Los Angeles, U.S.A.
which is used as her residence. The annual value of the house is $ 20,000. The value of
1 USD ($) may be taken as ₹ 65. She took ownership and possession of a flat in Chennai
on 01.07.2023, which is used for Self- Occupation, while she is in India.
The flat was used by her for 7 months only during the year ended 31.03.2024. Whilst the
Municipal Valuation is ₹ 32,000 p.m, the Fair Rent is ₹ 4,20,000 p.a. She paid the
following to Corporation of Chennai - Property Tax ₹ 16,200 and Sewerage Tax ₹ 1,800.
She had taken a Loan from Standard Chartered Bank for purchasing this flat. Interest
on Loan was - ₹

Period prior to 01.04.2023 49,200

01.04.2023 to 30.06.2023 50,800

01.07.2023 to 31.03.2024 1,31,300

Income from House Property

She had a house property in Bangalore, which was sold in March, 2024. In respect of
this house, she received arrears of rent of ₹ 60,000 in March, 2024. This amount has not
been charged to tax earlier.
Compute the Income chargeable from House Property of Mrs. Rohini Ravi for the
Assessment Year 2023-2024, exercising the most beneficial option available.

Illustration - Taxable Income &Tax Liability

Pritam occupied Three flats for his residential purposes, particulars of which are as
follows

Particulars Flat 1 Flat 2 Flat 3

Gross Annual Value 4,80,000 4,50,000 4,75,000

Municipal Taxes paid 10% 10% 10%

Interest payable on Loan for purchase of Flat - 1,20,000 1,60,000

Income of Pritam from his proprietary business, "Pritam Warehousing Corporation" is

₹ 19,50,000. Determine the Taxable Income and Tax Liability for AY 2024-2025, on the
assumption that he contributes ₹ 80,000 towards the Public Provident Fund.
You are informed that Pritam has attained the age of 60 on 23rd August 2023.
Illustration - Computation of Taxable Income & Tax Liability for NRI - N 19 Mr.
Jagdish, aged 61 years, has set-up his business in Thailand and is residing in Thailand
since last 20 years. He owns a house property in Bangkok, half of which is used as his
residence and half is given on rent (Such rent received, converted in INR is ₹ 6,00,000).
The annual value of the house in Thailand is ₹ 50,00,000 i.e. converted value in INR.
He purchased a flat in Pune during F.Y. 2019-2020, which has been given on monthly
rent of ₹ 27,500 since 01.07.2022. The annual property tax of Pune flat is ₹ 40,000 which
is paid by Mr. Jagdish whenever he comes to India. Mr. Jagdish last visited India in July

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2018. He has taken a loan from Union Bank of India for purchase of the Pune flat
amounting to ₹ 15,00,000. The interest on such loan for the F.Y. 2023-2024 was ₹ 84,000.
However, interest for March 2024 quarter has not yet been paid by Mr. Jagdish.
He had a house in Jaipur which was sold in May 2019. In respect of this house he
received arrear of rent of ₹ 96,000 in Feb 2024 (not taxed earlier).
Details of other incomes during F.Y. 2023-2024 which are as follows:
• Profit from business in Thailand ₹ 2,75,000
• Interest on bonds of a Japanese Co. ₹ 45,000 out of which 50% was received in India.
• Income from Apple Orchid in Nepal given on contract and the yearly contract fee of ₹
5,00,000, for F.Y. 2023-2024 was deposited directly by the contractor in Kathmandu
branch of Union Bank of India in Mr. Jagdish's bank account maintained with Union
Bank of India in Mr. Jagdish's bank account maintained with Union Bank of India's Pune
Branch.
Compute the total income of Mr. Jagdish for AY 2024-2025 chargeable to income tax in
India.
Illustration :A and B construct their houses on a piece of land purchased by them at
New Delhi. The built up area of each house is 1,000 sq. ft. (ground floor and an equal
area in the first floor). A starts construction on April 1,2017 and completes it on March
31,2023 . B starts the construction on April 1,2016 and completes the same on June 30,2022.
A occupies the entire house on April 1,2022. However, B occupies the ground floor on July
1,2022 and lets out the first for a rent of Rs. 15,000 per month. The tenant vacates the house
on December 31,2022 and B occupies the entire house during the period January 1,2022 to
March 31,2023.
The following is the other information:

Fair rental value of each unit (ground floor/first floor) (per annum) 1,00,000
Municipal value of each unit (ground floor/first floor) (per annum) 72,000
Municipal taxes paid by
A 8,000
B 8,000
Repair and maintenance charges paid by
-A 28,000
-B 30,000
A has availed a housing loan of Rs. 20 lakh @ 12 percent on April 1,2016. B has availed a
housing loan of Rs. 12 lakh @ 12 percent on July 1, 2016. No repayment is made by either
of them till March 31,2023.
Compute income from house property for A and B for the assessment year 2024-25.

Illustration: X owns a big house (erection completed on 31-03-2019) which is partly self-
occupied and partly let out. Unit 1(fifty per cent of the floor area) is let out for commercial
purposes on a monthly rent of Rs. 8,200pm (1 month and Rs.700 could not be realized). Unit
2 (25 per cent of the floor area) is used by X for the purpose of his profession, while Unit 3
(the remaining 25 percent), is utilized for the purpose of his residence. Other particulars of
the house are as follows:
Municipal valuation: Rs. 60,000, Fair rent 70,000 &Standard rent under the Delhi Rent Control
Act: Rs. 90,000, Muncipal tax: Rs. 15,000, Repairs: Rs. 8,000, Ground rent: Rs. 16,800,
Annual charge created by will by father in favour of Mrs.X: Rs. 9,000and Insurance Premium:
Rs. 12,000. Income of X has from profession is Rs. 7,95,000 (without debiting house rent and
other incidental expenditure on the portion of house used for profession Rs 8,000.
Determined the taxable income of X for the assessment year 2024-25 , on the
assumption that he maintains books of account on the basis of mercantile system.

RAM BAAN _HOUSE PROPERTY_SEP 24 CA VIKRAM BIYANI

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Illustration: Mr.X has 3 house properties situated at Delhi .

Property A is let out for business.
Property B is let out for residential purpose.
Property C has four identical units:
Unit P ---- let out for residential purpose throughout the P.Y
Unit Q ---- used for own business.
Unit R ---- used for own residence
Units S ---- let out for residential purposes ; but w.e.f. 1-1-2024 was also used for own
residence
The particulars of property A and B are as under:
Property A Property B
Municipal value 50,000 60,000
Actual rent 5,000 p.m 6,000 p.m
Fair rent 70,000 75,000
Standard rent 54,000 84,000
Date of completion of construction 1-3-2015 1-3-2016
Municipal tax paid 12,000 20,000
Repairs 5,000 -----
Interest on money borrowed for construction 30,000 12,000
Collection charges 4,800 4,800
Insurance premium paid 2,000 2,000
Mr.X has borrowed a sum of Rs. 2,50,000 @ 12% p.a on 1-1-2014 for construction of House
–A . The entire loan was still outstanding though interest is being paid every year.
The particulars of property C are as under :
Date of completion 1.3.2013
Date of purchase by Mr.X 1.5.2014
Rs.
Municipal value 1,60,000
Rent of unit P 3,000 p.m
Rent of unit S 3,000 p.m
Municipal tax paid 20,000
Interest on money borrowed for purchase of house 40,000
Lease rent of land of house property 5,000
Compute the income of Mr.X under the head RsIncome under the head house property
Rs for the A.Y 2024-25.

RAM BAAN _HOUSE PROPERTY_SEP 24 CA VIKRAM BIYANI

 15

Illustration :X owns four houses particulars of which are as follows :

I II II IV
MV 30 , 00 0 5, 0 00 68 , 00 0 95 , 0 0 0
FR 39 , 00 0 18 , 00 0 77 , 00 0 95 , 0 0 0
SR 36 , 20 0 12 , 00 0 75 , 00 0 90 , 0 0 0
Re nt ( i f pr o pe r ty is le t out
thr o u gh ou t t h e ye ar ) 42 , 00 0 - -- - - -- -- - -
UR 3, 5 00 - -- - - -- -- -
Mu n ic i pa l T ax es
- P aid b y X - -- - 50 0 7, 0 00 9, 0 0 0
- P aid b y t e na n t 3, 0 00 - -- - - -- -- - -
Da te of c o mp le t io n of M ay M ay m ar ch A p ril
cons tr uc t io n 31 , 20 2 2 31 , 20 2 2 31 , 20 2 2 1, 2 0 2 1
Na tur e o f occ u p a t io n SO SO SO
LO
P r op er ty I re m ai ns v ac an t f or 2 m o n t h ( Ma rc h 1 6 ,20 2 3 t o M ay 15 , 2 0 23 ) . X bo rr o ws
Rs . 3 0, 0 0 0 . Rs . 4 0 , 00 0 a n d R s. 6 5, 00 0 f o r c ons tr u ct i on o f H o use I , H ou s e II a n d
Ho us e I V , r es p ect iv e ly ( d a te of b or ro w i ng ; J un e 1 5 ,2 01 6 , d a t e o f r ep a y m en t of
l oa n a lo n g w it h in te r es t ; De c e mb er 3 1, 2 0 22 , r a t e o f int er es t 15 % ) .
B u si n es s in c o me of X for t h e P. Y 2 02 3 - 24 is R s . 1 4 , 5 5, 0 0 0 ( i t h a s b ee n c o m pu te d
as p e r t he pr ov is io n of t h e inc o me tax .) D e t er m in e t he t a xa b l e in c om e an d ta x
li ab i lit y of X f o r t h e A . Y 2 02 3- 2 4 on th e a s su m pti o n t ha t h e c on t r ib u te s R s.
40 , 00 0 t ow ar d s P PF.

RAM BAAN _HOUSE PROPERTY_SEP 24 CA VIKRAM BIYANI

 16

A B C D E
M un ic ipa l v a lue 40 40 40 40 40
F a ir r e nt 46 46 46 48 51
S t an d a rd r e nt NA 45 35 45 63

If the property is let out throughout the previous year ( no unrealized rent and
vacancy )

H 1 H 2 H 3 H 4 H 5
M un ic ipa l v a lue 10 5 10 5 10 5 10 5 10 5
F a ir r e nt 10 7 10 7 10 7 10 7 10 7
S t an d a rd r e nt NA 88 88 13 5 13 5
A nn u a l r en t 10 2 11 0 85 11 2 96

If property is let out throughout the previous year, but the entire rent could not be
collected

X Y Z A B
M un ic ipa l v a lue 60 60 60 11 2 11 2
F a ir r e nt 68 68 68 11 7 11 7
S t an d a rd r e nt 62 62 70 11 5 11 5
A nn u a l r en t 66 66 72 12 0 11 0
Un r e a liz e d r e n t 2 2 5 50 40

If the en re rent is collected but the property remains vacant

X Y Z A B C D
M un ic ipa l v a lue 60 61 60 80 80 14 0 14 0
F a ir r e nt 65 66 64 . 5 78 78 15 0 15 0
S t an d a rd r e nt 59 . 5 59 63 85 76 12 0 12 0
A nn u a l r en t 72 57 72 72 NA 96 14 4
P r op er t y r e ma i ns v ac a nt
1 1 ½ 5 3 12 10 10
Un r e a liz e d r e n t Ni l Nil Nil Ni l Nil Ni l Ni l

RAM BAAN _HOUSE PROPERTY_SEP 24 CA VIKRAM BIYANI

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If the property remains vacant and the en re rent is not collected

X Y Z A B
M un ic ipa l v a lue 14 0 18 0 18 0 14 0 23 1
F a ir r e nt 14 5 18 5 18 5 14 5 26 2
S t an d a rd r e nt 14 2 17 5 17 5 14 2 24 1
A nn u a l r en t 16 8 16 8 16 8 16 8 25 2
P r op er t y r e ma i ns v ac a nt ½ 1 1 3 5
Un r e a liz e d r e n t 14 42 1 70 42

Il l u st r a t ion :

F in d it th e i n co m e f ro m p r op er t y ch ar ge a bl e to t a x f o r th e A . Y 2 02 4- 2 5 i n th e f ol lo w i ng
ca s es - --

X Y
M un ici pa l v a lue 1, 2 0, 00 0 1 , 2 0, 00 0
F air r e nt 1, 3 0, 00 0 1 , 3 0, 00 0
S t an d a rd r e nt un d e r t h e r e nt c on t r o l A c t 1, 1 0, 00 0 1 , 1 0, 00 0
A ct ua l re nt if pr o p er ty is le t ou t thr o u gh ou t t h e P. Y 1, 2 6, 00 0 1 , 2 6, 00 0
Un r ea liz e d r e n t o f P . Y 2 0 23- 2 02 4 1 0, 5 0 0 ni l
P e r io d w he n t h e p ro p e rt y re ma i ns v ac a n t
( i n n o. o f mo n t h ) ( 1) ( n i l)
Lo ss d ue t o v a ca nc y 10 , 5 0 0 ni l
M un ici p al t ax e s - -- 18 , 0 0 0 1 8, 0 00
- -- - pa i d b y X a n d Y d ur in g 2 0 23- 2 4 1 7, 0 0 0 8, 00 0
- -- - pa i d b y X a n d Y a f te r Mar c h 3 1, 2 02 4 1 ,0 00 9, 00 0
- -- - pa i d b y t e n a nt s d u r ing 2 0 2 3 -2 4 nil 1, 00 0

RAM BAAN _HOUSE PROPERTY_SEP 24 CA VIKRAM BIYANI