Professional Documents
Culture Documents
Jamia Millia Islamia: (A Central University by An Act of Parliament)
Jamia Millia Islamia: (A Central University by An Act of Parliament)
Jamia Millia Islamia: (A Central University by An Act of Parliament)
Faculty Of Law
B.A LLB (H) Self- Finance
VI Semester
Assignment
Topic –Income From House Property
ACKNOWLEDGEMENT
Firstly, I would like to thank my professor Mrs. Kiran Bala, for giving me this
opportunity to do this wonderful project on the topic: “Income From House
Property”, which also helped me in doing a lot of research and I came to know
about so many new facts and rules related to Tax law
3
Table Of Contents
Essentials of Section 22
Following are the essentials for property to be taxable under this head of income:
III. It should not be used by the assessee for his own business or profession.
"Building" means a structure made up of any material (wood, mud, stones, bricks or
concrete) and which can be used as a dwelling house, store house, office, factory, music hall,
dance hall, lecture hall, theatre, stadium or swimming pool.
Important points:
» Roof is not always essential for a structure to be a building as it depends upon the use for
which that structure is to be used. If it is to be used as stadium or swimming pool, roof is not
required whereas in other cases roof is important. Therefore, roof is essential for a structure
to be regarded as residential building and not for non-residential building.
» An incomplete structure or structure in ruin without a roof or without doors can not be
called as building.
“Lands appurtenant thereto”: Appurtenant means attached to that building. Therefore, any
land which is attached to the building is also covered under Section 22. The land attached to
residential building may be in the form of path attaching that building to the street,
compounds, courtyards, backyards, playground, kitchen, garden, motor garage, any parking
space, stable, cattle shed, coach room, etc. However, the land attached to non-residential
building may be in the form of path/road connecting that building to the road, or connecting
one department to other department, parking space, playground for the benefit of the
employee, etc. As, for the land to be covered under this head of income it must be attached to
the building therefore following incomes are not covered under this head of income:
5
(1) Rent from vacant plot of land as there is no building but only land is there.
Second condition for the property to be taxable under this head is that assessee should be
owner of the property. An owner does not mean only a legal owner i.e., registered owner of
the house property. However, it also includes a Deemed Owner.
Deemed Owner [Section 27]: Following persons are deemed to be owners of the house
property even though not legal/registered owner of the house property:
(1) Transfer of house property to Spouse or minor child [Section 27(1)]: if an individual
transfers the house property to his spouse or minor child without adequate consideration then
that individual (transferor) is deemed owner of that house property i.e., Mr. A transfers house
property worth Rs. 50,00,000 to Mrs. A without consideration then Mr. A would be deemed
owner of the house property.
Exceptions
(a) In following cases if property is transferred to spouse then that individual (transferor) is
not deemed owner of that house property:
(b) In following cases if property is transferred to the minor child then that individual
(transferor) is not deemed owner of that house property.
Important Point: If inadequate consideration is given by the transferee then transferor will be
deemed owner of proportionate share i.e., Mr. A transfers house property worth Rs. 50 Lac to
Mrs. A and she transfers jewellery/shares worth Rs. 25 Lac then Mr. A would be deemed
owner of the 50% share of the house property.
(2) A holder of impartible estate (Section 27(ii)): The Holder of impartible estate is deemed
owner of all the property in the estate. An impartible estate is a property which cannot be
divided and to which an assessee succeeds under law e.g.. since a temple cannot be divided
so any family member succeed to it under law is deemed owner of that temple.
6
(4) A person acquiring property under section 53A of the Transfer of Property Act (Section
27(iv)): A person who acquires actual physical possession of an immovable property under
section 53A of the Transfer of Property Act, 1882, is deemed owner of that property even if it
is not registered in his name. However, following conditions should be fulfilled under section
53A of the Transfer of Property Act, 1882:
(i) There should be a written agreement for the transfer of an immovable property between
buyer and seller.
(ii) The buyer should have paid a part of the consideration and should be ready to pay
remaining consideration. Here important fact is that the purchaser is ready to make payment
whenever the payment becomes due. [Sushma Rani Bonsai v CIT (2007) 165 Taxman 145
(Del) (Mag.)].
(iii) The buyer should acquire actual physical possession of the property. It is enough if
transferee has, by virtue of that transaction, a right to enter upon and exercise acts of
possession effectively, [Authority for Advance Rulings v Jasbir Singh Sarkaria, In Re
(2007) 164 Taxman 108 (AAR-New Delhi)].
(5) A Person having rights In a building under section 269 UA(f) of the Income-tax Act
(Section 27(v)): If a person acquires a right in a building under section 269UA(f) of the
Income-tax Act, 1961 then he is deemed owner of that house property. Section 269 UA(f)
talks about lease for 12 years where the period of 12 years may be fixed initially or after the
extension.
Exceptions: In the following exceptional cases, Lessee would not be deemed owner of the
house property:
Examples
(1) Mr. A, owner of a house property, gives that house property on lease to Mr. B for 20
years at lease rent of Rs 20,000 per month. Mr. B becomes deemed owner of the house
property.
(2) Mr. A, owner of a house property, gives that house property on lease to Mr. B for a
period of 6 years at lease rent of Rs 20,000 per month. Mr. B has a right to renew the
lease for further period of 6 years after the expiry of lease. As aggregate period of lease is
more than 12 years therefore, Mr. B becomes deemed owner of the house property.
7
(3) Mr. A, owner of a house property, gives that house property on lease to Mr. B for a
period of 11 months at lease rent of Rs 20,000 per month. Mr. B has a right to renew the
lease for further period of 50 years after the expiry of 11 months. Though aggregate
period of lease is more than 12 years but original lease period is less than 12 months
therefore, Mr. B is not deemed owner of the house property.
(4) Mr. A, owner of a house property, gives that house property on lease to Mr. B for a
period of one month at lease rent of Rs. 20,000 per month. Mr. B has a right to renew the
lease but every time it would be renewed for a period of one month for further period of
50 years. Though aggregate period of lease is more than 12 years but original lease is on
month to month therefore, Mr. B is not deemed owner of the house property.
Important points:
Income from subletting is not taxable under this Head of income as assessee
(receiver of rent) is not owner of the house property and it is taxable as either
profit or gain of business and profession or as 'income'.
If ownership is in dispute in the court of law then :
(a) Any person, who receives rent of the house property as owner, in case property
is let out, would be assessee for tax under section 22.
(b) Any person, who enjoys the possession of the house property as owner, in case
property is not let out, would be assessee for tax under section 22.
However, once matter is decided by the court then person declared by the court as owner
would be assessee for tax under section 22.
It should not be used by the assessee for his own business or profession
For a house property to be taxable under this Head of income it should not be used by the
assessee for his own business or profession such as office, godown, factory, music hall, dance
hall, lecture hall, theatre, stadium or swimming pool. Therefore, if it is used by assessee for
himself then it should be used for residential purpose and if it is let out then it can be used by
the tenant for residential purpose or for business or profession i.e., commercial purpose
(office, godown, factory, music hall, dance once hall, lecture hall, theatre, stadium or
swimming pool).
Where residential quarters situated in the factory campus were given to employees by the
assessee at nominal rent of Rs.100/month, the purpose of letting of the residential quarters is
to run the business efficiently and smoothly. Therefore the residential quarters will be treated
as house property used by the assessee for his business. Hence, annual value will not be
chargeable to tax under this head of income (under Section 22) and rent of Rs.100/month
from workers is business income [CIT v Delhi Cloth and General Mills Ltd (1966) 591 TR
152 (P&H)].
Further, where a few rooms in the factory were let out by the company to Government at
nominal rent for locating a branch of' nationalized bank, post office, police station, central
8
excise office and railway station quarters for carrying on its business efficiently and
smoothly. It was held that as letting of was incidental to business of the company therefore,
annual value will not be chargeable to tax under this head of income (under section 22) and
rent is business income of the company [CIT v National Newsprint and Paper Mills
(1978)114 ITR 388 (MP)].
Important Points:
Income from house property is not taxable under this head of income (under
section 22): Income from house property is not taxable under this head of income in
the following cases:
(a) If it is used by the assessee for his own business or profession i.e., commercial
purpose (office, godown, factory, music hall, dance hall, lecture hall. theatre, stadium or
swimming pool).
(b) If it is let out by the assessee and letting of is incidental to business so that
assessee could run its business efficiently and smoothly.
Composite rent: Sometimes owner charges rent from tenant not only for the house
property but also as service charges/hire charges for various facilities/ plants,
machinery, etc. provided with the house. Such total rent is known as composite rent. It
can be of two types:
(a) Composite rent which include rent for house property and service charges for
various facilities provided along with the house such as lift, gas, etc.: Where rent is
received by the assessee as rent for house property and also as service charges for
various facilities provided along with the house such as gas, lift, water, electricity and
ward, air conditioning, etc. then composite rent shall be split up and part of the rent
attributable to house property shall be income under this head of income and
remaining part of composite rent received for rendering services shall be assessable as
income from other sources.
(b) Composite rent which Includes rent for house property and hire charges of
plant, etc.: Where rent is received by the assessee as rent for house property and also
as hire charges for plant, furniture and machinery belonging to owner then composite
rent may or may not be separable.
(i) Where it is separable: Where letting of property is separable from letting of other
assets like plant, machinery and furniture and rent from house property is separable
from the hire charges for machinery, plant or furniture then rent for house shall be
taxable under this head and remaining composite rent (i.e. hire charges) for plant,
machinery and furniture would be taxable either under head "Profit and Gains of
Business or Profession" or "Income from Other Sources".
(ii) Where it is not separable: Where letting of property is inseparable from letting of
other assets like plant, machinery and furniture and rent from house property is not
separable from the hire charges for machinery, plant or furniture then whole
9
composite rent shall be taxable either under head "Profit and Gains of Business or
Profession" or "Income from Other Sources" and not under the head of "house
property".
Income from house property in foreign country: Where assessee is resident or
resident and ordinarily resident in India and he has property in foreign country then
income from such house property from foreign country would be taxable in i the
hands of assessee. It is immaterial whether such income is brought into India or not.
However, if assessee is not resident in India or resident but not ordinarily resident in
India then income from house property situated in foreign country will be taxable in
India only where it is received in India during the previous year.
Income from house property is not taxable under this head of Income: In following
cases income from house property is not chargeable to tax:
(a) Farm House: Income from any building owned or occupied by an agriculturist or
receiver of rent or revenue of such land provided that-
(i) such building is situated in the agricultural land or the immediate vicinity of agriculture
land; and
(b) Property used by assessee for his own business or profession: Where house property is
used by assessee for his own business or profession then property shall be chargeable to tax
under head "Profits or Gains from Business or Profession" and not tinder this head of income.
(c) Self-occupied house property: Where house property is used by assessee for his own
residential purposes then annual value shall be nil.
(d) Property for charitable purposes: Where property is used for charitable religious
purposes then income from such property is exempted under section 11.
(e) Property of Registered Trade Union or Local authority: Where property is held by
registered trade union or local authority then income from such property is not taxable.
(f) House Property (Palace) of ex-ruler: Where house property is owned by an ex-ruler then
annual value of that house property is not taxable.
Where above conditions are fulfilled then income from house property shall be gross Annual
Value minus deductions e.g.,
Property
Annual value: This is the actual rent received or to be received by the property owner on renting
out the house.
Municipal value: This is the value on house property as calculated by the municipal authorities
for imposing municipal taxes.
Fair rent value: Fair rental value is the rent which a similar property with similar features in the
same locality would fetch.
11
Standard rent: The standard rent is determined under the Rent Control Act. If the standard rent
has been fixed for any property under the Rent Control Act, the property owner cannot charge a
rent higher than the standard fixed rent.
Rent received
Municipal Valuation
In case the Rent Control Act applies, Gross Annual Value will be the highest of:
Standard Rent
Rent Received
Net Annual Value: NAV is calculated as Gross Annual Value minus Municipal Taxes paid.
Deductions: To ascertain the actual taxable income, the taxpayer can claim the following
deductions under Section 24 of the Income Tax Act, 1961.
Standard Deduction: The assesse can claim 30% of the NAV as a deduction towards
rent collection, repairs etc., irrespective of what the actual expense incurred is. This
deduction will not be permitted in case the GAV is nil.
Interest on home loan: Deduction can be claimed for interest on home loan under
Section 24 of the Income Tax Act. The limit under this section is Rs 2 lakhs.
Conditions associated with claiming tax exemption on home loan interest are:
Loan should be availed after 1st April, 1999 for property purchase or construction.
The taxpayer can claim benefits for repairs or reconstruction work of an existing property.
The purchase or construction needs to be completed within 3 years from the end of the
financial year in which the loan was availed.
12
Computation of Income Under House Property – Self Occupied & Let Out:
Restricted to Rs. 2
Less: Interest on Housing Loan No limit
lakhs
Property
Tax on the house is calculated on the property's NAV.
If the taxpayer’s house is vacant for a certain period of time and later let out, the
computation of Income from House Property should be done only for the rent received -
not for the entire year.
If the taxpayer’s house is vacant for the whole year and the individual is living in another
city due to his or her employment, but is still paying municipal taxes, then this can be set
off against income from other sources during the same year.
Tax under the head of “ Income from house property” is not a tax upon rent of a
property it is a tax on inherent capacity of a building to yield income. The standard
selected as a measure of the income to be taxed as annual income
The Gross Annual Value of the house property shall be higher of following:
a) Expected rent, i.e., the sum for which the property might reasonably be expected to be let
out from year to year. Expected rent shall be higher of municipal valuation or fair rent of the
property, subject to maximum of standard rent;
b) Rent actually received or receivable after excluding unrealized rent but before deducting
loss due to vacancy
Out of sum computed above, any loss incurred due to vacancy in the house property shall be
deducted and the remaining sum so computed shall be deemed to the gross annual value.
14
In case of let out House Property [LOHP], gross annual value is,—
Or
However, section 23(1)(c) is applicable when Actual rent received or receivable by the
assessee is less than Reasonable expected rent due to vacancy.
Or
Whichever is higher
(a) 1 Municipal value: Municipal value is values as assessed by the local authority for
imposing municipal taxes.
(a) 2 Fair rent: Fair rent is rent of same or similar property situated in same or similar
locality. However, two properties can never be similar in every aspect but if property in
neighborhood is comparable in some aspect to property in question then rent of such property
in neighborhood will be considered to decide Reasonable expected rent.
The Supreme Court of India held that Reasonable expected rent cannot exceed standard rent
if Rent Control Act is applicable in that area. It means the standard rent is the maximum
amount of Reasonable expected rent. [Sheila Kaushish v CIT (1981) 7 ITR I (SC)]; Amolak
Ram Khosla v CIT (1981) 7 1TR 51 (SC) and Dr. Balbir Singh v MCD (1985) 152 ITR 388
(SC)].
Or
Whichever is higher subject to the maximum of standard rent if Rent Control Act is
applicable.
15
(b) Actual rent received or receivable by the assessee (R): Actual rent received or receivable
by the assessee does not include unrealized rent (R2) and rent for the vacant period (R3).
Therefore, R= RI - R2 - R3.
Where,
RI = Annual rent for the previous year for which property is let out
R2 = unrealized rent
Annual rent for the previous year for which property is let out (RI): "Annual rent” means:
(a) where the property is let throughout the year ending on the valuation date i.e., the
previous year, the actual rent received or receivable by the owner in respect of such year;
(b) where the property is let for only a part of the previous year, the amount which bears the
same proportion to the amount of actual rent received or receivable by the owner for the
period for which the property is let out as the period of twelve months bears to the number of
months (including part of a month) for which the property is let out during the previous year.
Unrealized rent (R2): Rent, which could not be realized by the owner (assessee) because of
some dispute with tenant, is known as unrealized rent. It is to be reduced from annual rent if
conditions laid down under Rule 4 of Income-tax Rules, 1962 are fulfilled:
Rent for the vacant period (R3): If the property remained vacant for some time during the
current previous year the rent of the vacant period is to be reduced from annual rent.
Example 1: If the property is let out for 12 months @ Rs 5,000 pm and the tenant vacated
the property after 10 months or property is let out for 10 months only. Then,
When Actual rent received or receivable by the assessee is less than Reasonable expected
rent due to vacancy [Section 23(I)(c)]: If following conditions are fulfilled then the Actual
rent received or receivable by the assessee (R) would be Annual value of the house property:
(i) The property is let out property but whole or any part of the property remained vacant
during the whole or any part of the previous year. It is not compulsory that the property
should be actually let out during the previous year, the intention to let out is important.
Therefore, if the property is held by the assessee for letting out and reasonable efforts are
made to find the tenant and assessee could not succeed in letting out then this condition is
fulfilled.
The words 'property is let' in Section 23(1)(c) do not talk of actual letting out but talk about
intention to let out; if property is held by owner for letting out and efforts are made to let it
out, that property is covered by this clause [Premsudha Export (P.) Ltd v CIT (2007) 17
SOT 293 (Mum)].
(ii) Actual rent received or receivable by the assessee is less than Reasonable expected rent.
(iii)This loss in the rent is only due to vacancy and not due to any other factor.
Where loss in rent is partly due to vacancy and partly due to other factors like letting out the
Property at lower rent or unrealized rent then mode of computation is not provided in the Act
and it is very clear that intention of the legislature is to give relief to the assessee whose
property remained vacant. Therefore, in such situation there are following three possibilities
[CIT v Chandenlal Maganlal (2002) 120 Taxman 38 Guj]:
Gross Annual Value of Self Occupied Residential House Property [SORHP] [Section
23(2)]:
— Where
(a) Property is used by assessee throughout the previous year for his (or family member) own
residential purpose;
Or
(a) Such property could not be occupied by the assessee throughout the previous year for
his (or family member) own residential purpose because either due to employment or
business or profession assessee is residing at some other place and no other benefit is
derived from such property
Then Gross Annual Value would be Nil.
A house for residential purpose does not require a compulsory residence; it only requires
that house should be available for residential purpose of the assessee all the time. Where
17
the assessee has retained exclusive control over possession of a house owned by him,
though he may not be actually present in the house and when he is away from it, he is still
in constructive possession of his residential house and as such he cannot be denied the
benefit under section 23(2)(a). [CIT v Deepak Seth (2005) 1 SOT 35 (Del)].
A vacant property shall be treated as Self-occupied House property with Gross Annual
Value Nil if following conditions are fulfilled:
Example: Mr. A owns a house in Chandigarh. During previous year 2009-10, he was
working in Delhi and was residing in a rented accommodation there. His house in
Chandigarh remained vacant throughout the previous year 2009-10 and he did not take
any other benefit from that house. As all the conditions laid down under section 23(2)(b)
are fulfilled therefore vacant house in Chandigarh is self-occupied house property.
However, where above conditions are not fulfilled then vacant house shall not be
treated as self-occupied property.
Further Delhi High Court held that Section 23(2)(b) would apply to all those cases
where under the provisions of the Constitution, officials and dignitaries reside in official
residence instead of their own residence because of their office [CIT v Justice Avadh Bihari
Rohatgi (1981) 21 Taxman 409 (Del)].
Important points:
Only Individual or HUF can have the benefit of Section 23(2): Section 23(2) can be
applied if assessee is an individual or HUF as any other person like company,
partnership firm, AOPs/BOIs, Local Authority and any other artificial judicial person
cannot occupy the property for his (or family member) own residential purpose.
Where the house property is occupied for residential purposes not in the capacity of
the owner: If the house property is occupied for residential purposes not in the
capacity of the owner but as an employee then it will be let out house property and
18
Gross Annual Value will be determined according to Section 23(1). Where assessee
lets out his own house property to his employer-company which in turn was allotted
to assessee as rent free accommodation (perquisite). Assessee was not entitled for
benefit of Section 23(2) as he occupied the property not in the capacity of the owner
but as an employee therefore, it will be let out house property and Gross Annual
Value will be determined according to Section 23(1) [D. R. Sunder Raj v CIT (1979)
2 Taxman 458 (AP) ].
If more than one property is occupied by the assessee during previous year: If more
than one property is occupied by the assessee during previous year for residential
purpose then depending upon assessee's discretion one house property will be treated
as self-occupied house property and Gross Annual Value will be determined
according to Section 23(2) i.e., nil. However, remaining will be "Deemed to be Let
Out house property/s" and gross Annual Value will be determined according to
Section 23(1) i.e.,
(a) Reasonable expected rent; or
(b) Actual rent received or receivable by the assessee
whichever is higher. However, Section 23(1)(c) will not be applicable. As in
such situation actual rent received/receivable is nil. Therefore,
Where property is partly Self Occupied and partly let out [Section 23(3)]: If
the house property consist of two or more independent residential units and
one or more units are occupied by the assessee for own residential purposes
and remaining units are let out then Gross Annual Value of:
(a) the Let out units will be determined according to Section 23(1); and
(b) the self-occupied units will be determined according to Section 23(2)
i.e., nil.
Where property is Self-Occupied for the part of the previous year and let out
for remaining Previous year [Section 23(3)]: If the house property is Self-
Occupied for a part of the previous year and let out for the remaining previous
year then Gross Annual Value of the property:
(a) For the let out period will be determined according to Section 23(1); and
(b) for the self-occupied period will be determined according to Section 23(2)
i.e., nil.
Deductions
From the Gross Annual Value as calculated under section 23(1) give following deductions: n
Municipal taxes levied by local authority and paid by assessee [Proviso to Section 23]
Municipal taxes levied by local authority in respect of the house property will be deducted if
following conditions are fulfilled:
Important points:
30% of Net Annual Value is to be deducted from Net Annual Value as Standard Deduction.
Important points:
Standard deduction is given for expenditure incurred by the assessee in letting out the
house property.
The actual expenditure incurred by the assessee is not important and amount of
standard deduction is fixed i.e. 30% of annual value.
Where capital is borrowed by the assessee for the purpose of purchase, reconstruction, repair,
renovation or construction of the house property and he is paying interest on such borrowed
capital then interest paid/payable during current previous year is allowed as deduction.
Important points:
For claiming deduction there should be sufficient connection among borrowed capital,
interest and house property i.e., if borrowed capital is not spent on house property but
somewhere else then no deduction can be claimed under section 24(b).
20
Where capital is borrowed by the assessee for the purpose of purchase or reconstruction of
house property then assessee can claim deduction relating to interest of Pre-construction
period. For this aggregate the interest of Pre-construction period and divide, it into five equal
instalments and first instalment allowed as deduction in the previous year in which house is
acquired or construct is completed. Remaining four instalments will be allowed as deduction
in the four immediately succeeding previous years.
Whichever is earlier
(i) Where unrealized rent was of the previous year 2000-2001 or of earlier previous
year and was realized in assessment year 2001-2002 or earlier assessment year or
where unrealized rent was allowed as deduction in assessment year 2001-2002 or in
22
earlier assessment year [Section 25A]: Where under the earlier law assessee has
claimed deduction regarding unrealised rent in the assessment year 2001-2002 or in
earlier assessment year and assessee has realized any amount in respect of such rent
during any assessment year i.e., 2001-2002 or earlier assessment year i.e. 2000-01
and so on then amount so realized would be "income from house property" of the
previous year in which it is realised.
Important points:
Section 25A is applicable where unrealized rent is of the previous year 2000-
2001 or of earlier previous year.
Assessee will not be eligible for any deduction under section 23 or 24.
The amount recovered would be taxable even if house is not owned by the
assessee in the year of recovery.
(ii) Where unrealized rent was of the previous year 2001-2002 or of subsequent
previous year and was realized in assessment year 2002-2003 or subsequent
assessment year [Section 25AA]: Where assessee cannot realize the rent of the
previous year 2001-2002 or of subsequent previous year and was realized in
assessment year 2002-2003 or subsequent year then amount so realized would be
"income from house property" of the previous year in which it is realized.
Important points:
Section 25AA is applicable where unrealized rent is of the previous Year
2001-2002 or of subsequent previous year.
The amount so realized should not be included in Gross Annual Value earlier
and should be deducted from Annual rent as unrealized rent (R2).
If the amount so realized is already included in Gross Annual Value earlier
and was not deducted from Annual rent as unrealized rent (R2) because
conditions laid down in Rule 4 of Income-tax Rules, 1962 are not fulfilled
then Section 25AA will not be applicable. And assessee will not be eligible
for any deduction under section 23 or 24.
The amount recovered would be taxable even if house is not owned by the
assessee in the year of recovery.
Section 25B would be applicable even if assessee is not owner of the house property in
the current previous year in which rent is received.
23
Solution: The arrears of rent of Rs 60,000 (Rs 5,000 × 12), of the previous year 2013-
2014) received in the previous year 2014-15 would be "income from House Property" after
giving Standard deduction of 30%.
Therefore, "income from House Property" during previous year 2014-15 under section
25B = Rs 60,000 − Rs 18,000 = Rs 42,000
This income is in addition to "income from house property" of current previous year
(2014-15) as calculated according to Section 23 after giving deduction under section 24.
Where two or more persons jointly own a house property consisting of buildings or lands
appurtenant thereto then such persons are known as co-owners. Further, where respective
shares of co-owners are:
(a) definite and ascertainable then such co-owners shall not be assessed as AOPs but the
proportionate share of each co-owner in the income from house property as calculated
in accordance with sections 22-25 shall be included in his Total Income.
(b) not definite and ascertainable then each co-owner shall be deemed to have equal share
in the house property. Hence, proportionate share of each co-owner in the income
from house property as calculated in accordance with sections 22-25 shall be included
in his Total income.
(a) Where such jointly owned House property is let out house property then annual
value will be first determined according to Section 23(1) as if a single person
owns such property. Thereafter, income from house property so calculated shall
be distributed amongst each co-owner as per their share (equal share in case their
respective shares are not definite and ascertainable and proportionate share In
case their respective shares are definite and ascertainable).
(b) Where such jointly owned House property is self-occupied house property then
annual value for each of such co-owner will be nil [Section 23 (2)]. But each of
such co-owner is entitled to deduction of Rs 30,000 or Rs 1,50,000 (in
exceptional cases) regarding annual interest for loan under section 24(b)
24
Bibliography
Books
RATTAN, JYOTI. Taxation Laws, 6th Edition. New Delhi: Bharat Law House, 2014.
B. B. Lal and N. Vashist: Direct Taxes, Income Tax, Wealth Tax and Tax Planning,
Darling Kindersley (India) Pvt. Ltd., Delhi.
Girish Ahuja and Ravi Gupta: Systematic Approach to Income-Tax, Service Tax and
VAT, Bharat Law House, Jaipur.
Sampath Iyengars: Law of Income Tax, Bharat Law House Pvt. Ltd., Jaipur