FIVE

CHAPTER
house property
comefrom
[Sec.22]
Chargeability
o& lUnderthe Act,annlnal valueol a property, consistingof any buildings or lands
appurtenant
80to.ofwhichtheassessee is Owner, is chargeable totax underthe
head"Incomelrom housC
ert". Tax levied under section 22 is tax on annual value of house
property and it is not
tax onhouse propertyheisford Clubv. CIT |2000| 109 Taxman 215(SC). If, however,
a house property is occuped by the assessee lor the purpose of his business or profession,
carried onby him (theprolitsof which are chargeable toincome-tax), annual value of such
to lax under the head
oroDerty is not chargeable "lncomefrom house property".
is
Three conditions- Rental income taxable under the head"Incomefrom house property",
the following three conditions are satislied:
ofany buildings or lands appurtenant
a the property shouldconsist thereto:
h the assessee should be the owner of the property; and
be
C the property should not used by the owner for the purpose of any business or profession
carried on by him, the profits of which are chargcable to income-tax.

Unless,
therefore, all the aforesaid conditions are satisfied, the property income cannot be
tax underthe head "Incomefrom house property".
charged to
In other words, if ail the aforesaid conditions are satisfied, property incomeis taxable
under
section 22underthe head "Incomefrom house property". It makes no difference if the assessee
is a company which has been incorporated with the object of buying and
developing landed
Ltd. v. CIT[1972]83 ITR 700 (SC).It equally makes no
properties-S.G. Mercantile Corpn. (P.)
the business of the
difference that the property constitutes stock-in-trade of a business or
assesseeis to
let
out house properties-O.RM.SP.SV. Firm v. CIT[1960]39 ITR 327 (Mad.),
Salisbury House Estate
Lid. v. Fry[1930] AC 432 (HL).

buildings or land appurtenantthereto-

The term "property"
86.1 Property consistingofany
under section 22 it is used for a limited purpose, ie., the property
is very wide, though

lands appurtenant thereto".All other types of properties are,

"consistingof any buildings or
excluded from the scopeof section 22. Rental income
of a vacant plot (not appurtenant
thus,
but is
to tax under the head "Incomefrom house property",
tobuilding) is not chargeable the head
taxableeither under the head "Profits and gains of business
or profession" or under
Income from other sources", as the case may be.

word "building" is neither defined in the Act nor in the Rules.

86.1-1
"Building" defined-The The Random House
Therefore, one has to depend upon its ordinary natural meaning.
box-
buildingas "arelativelypermanent, essentially
Dictionaryof the English Languagedefines as
ike construction having a roof and used for any of a wide variety of activities, living,

or manufacturing".
The Webster's New International Dictionary assigns the
entertaining as now generally
to the word building: "That which is built ;specifically,
following meaning more or less
to stand
used, a fabric, or edifice, framed or constructed, designed permanently,
shelter for beasts or
and covering a spaceof land, for use as a dwelling, store house, factory,
sense does not include a mere wall, fence,
some other useful purpose; building in this
monument,hoarding orsimilar structure though designed forpermanentusewhereitstands;
not a steam boat, ship or other vessel of navigation."

Apart the dictionary meaning discussed above, many courts have given judicial
from
interpretation of the
word "building",some of which are summarised as under:
of the brick or stone work covered by roof-Moir v. Williams[1892)1
.Building is anenclosure
1QBD264.
177