8 Proprrty

ofempover ordirretors
Ineld as vtwk in
trad Pars 87.3
das residenee of
cCs or its

hi cmpl lpany, directors, elc,, wlo reWlienaho

poper1y is (r
y is
coIeed eupired asresidenn r
with
sE wlicthero paynenl proolion of iusinesh
ol rent
icicntly nd letfin! (nl ol or oterwise,
Ioenabe them m tliuharye p"
their
uctionsolthe
t assCssee, such
property is
sibservienl and 1al tt the main
business essee itscll lor
tlhe
anocCIalion amounts Io ineidenl
the as: purposes ol id ueer ed praperty
anoceuppation 'aid
by
is remises,
its
and incoIeIronm such business, cven thouglh obusinC%)
% is aually run
(ITv.Modi bidustries Id.|1994|73 prop*ity is not assewable as ire
incne from bou*
property-
stion of la-
Taxan 691/210ITR 1
Whethcr an assessee is "occupying" (Delhi) (F%)
Oitlcss/profession carricd on any part
O o building for the
aytOflaw-Upper idia Chanber of Conere f which are assesable purpE
by him, the
to ta%, » a
prolits
v.
iation,repairs adcollection eharges -I CIT|1947| 15 FTR 263(AI1.
is
wned by theown wothwhile
assessee and used to ole that in
respect of houe
property by him Sor his own
ciation is underscclion 32
allowable busincs profession,
(or pro
allowed in
(whercas10 deduction on accunt of
un
wance is respect ol house properly,
22). Moreover,in such case,
actual
income fron which is
repair expenses and collection
preciatíon
dcpre
charycablc under
quarters let out to
ofresidentialas
lowcd
charges
employcesor wlierc letting is incidental to (in the
main business)
ca
business deduction under scctions
31 and 37 (instead of
lustcdannualvalue underseclion 24whichis
adju
onc-fourth of nc
applicable only il annual valucis
22).
section
taxablc under

plicability
of sectio 22 in certain
typical situations
7.Apart from
the points discussed in para 86, the
following points are relevant for
understanding the implications ad
scope of section 22
House property in
87.1 a foreign country -A resident assessec is taxable under
section 22in
respect ofannual value ot a property situated in a
foreign country. A resident but not ordinarily
resident or non-resiIdent is, however,chargeable under section
22 in respect of incomeofa
house property situated abroad, if income is reccived in
India during the previous ycar. If
tax
incidence is attracted
under section 22in respect of a house property situated abroad,
be the annual
value will
computed as if
property is situated in India.The Madras
High Court in CT
.R.Venugopala Reddiar[1965]58 ITR 439 obscrved that while taxable
should be made between a house property computing income,no
distinction situated in India and a houseproperty
situated abroad.

87.2 Disputed ownership-Iftitle of ownershipof a house property under dispute inacourt is

is the
of law, the decision as to who owner rests with the Income-tax Department. The
to decide
department has prima facie the power whetherthe assessee is the owner and is
tax under for judicial judgment of any suit filed in
chargeableto section 22, without waiting
respect of the property-Re.Keshardeo Chamaria[1937]5ITR 246 (Cal.). It was observed in
Franklin
v.
IRC 15TC 464 that therecipient of income taxable though there may be a rival
is

claim to the title of sourceof income and he may have to give up and accountfor what he
as
is taxed upon.
87.3Property held asstock-in-trade-Asa specifichead of charge is provided forincome from
house property, annualvalue of houseproperty cannot bebrought to tax underany other head
of income. It will remain so even if property is held by the assessee as stock-in-trade of a
business,or if the assessee is engaged in the business of letting outofproperty on rent, orif
the assessee is a company which is incorporated for the purpose of owning house property.

House-owning, however profitable, is neither trade nor business for the purposeof the Act.
Where income is derived from house property by the exercise of property rights, income falls
under the head"Income from houseproperty"-CITv. National
Storage (P)Ltd[1963]48
ITR
577 (Bom.).
of is taxable under
87.3-1
Exceptions-Therule that incomefrom ownership house property
the head "Income from house property" has the following exceptions
incidentalandsubservient
is to the main business-If the letting is only incidental and
Letting
the main business of the assessee, rental income is not taxable under the head
Subservient to
the head "Profits
Income from house property"
but is chargeable as business income under
and gains of business or profession" [see also para 86.3-1]