The document discusses the taxation of income from house properties in India. It covers topics such as: - Who can be assessed for house property income (the owner or deemed owner) - Determining the gross annual value of a house property, which is based on earning capacity rather than actual rent received - Deductions available from net annual value such as interest on loans - Treatment of self-occupied properties vs. rented out properties for tax purposes - Taxation of arrears of rent or interest received in a year regardless of ownership at the time of receipt The document provides guidance on calculating income, deductions, treatment of vacant properties, co-owned properties, and recovery of previous unpaid rent or

1. Income from House
Property
o s e e- t a x
r B om
ka nc
an f I
S h r o Pu r i
cto TU,
In spe MS

2.  Assessed must be the owner or
deemed owner.
 Applicable to HPs not used by owner
for his business.
 In some situations income may be
charged on notional basis.
 Gross Annual Value is determined
based on the earning capacity of the
house property and not always on rent.

3. The occupant in case of part
performance of contract (Sec. 53A
of the Transfer of Property Act).
o Possession
o Rights
o Payment
o Legal Title
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4.  If the house property is transferred to
spouse without adequate consideration.
Except in case of legal separation.
 If the house property is transferred to a
minor child.
Except in cases of minor married daughter.
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5.  House in a foreign country- Taxable.
CIT vs R.VenugopalaReddiar,58 ITR 439 Mad.
 Property held as stock-in-trade -- Taxable
under the head H.P.
 Letting of houses can not be a business.
CIT vs National Storage PLtd.48 ITR 577 Bom.
 Composite rent- Split up to H.P. income
and income from other source.
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6. Fair Market Rent
Municipal
Valuation
Higher
Lower Higher
Comparable
Standard is the
Rent Rent
Rent GAV
Received
NAV = GAV – Municipal Taxes paid.
Sheila Kaushish vs CIT 7 Taxman 1 SC.
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7. 1. One House Property
a. Self occupied
b. Not occupied owing to employment
2. More than one house property – All
are self occupied.
3. House property (ies) – Let out.
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8. The Gross Annual Value will be NIL.
1. In case one owns a single HP and is
occupied by himself.
2. In case one owns a single HP but
cannot be occupied by him owing
to his employment / business and
the HP has not been let out.
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9. 1. The assessee has the option to choose
one HP as S.O.P. He may choose
different HP as S.O.P. in different years.
2. For other HPs AV will be determined
notionally.
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10. Gross Annual Value to be calculated
for each HP separately.
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11. Rent received will exclude unrealised
rent if conditions of Rule-4 are satisfied:
 Tenancy must be bona fide.
 The tenant has vacated the HP or steps
have been taken to compel him to do so.
 The defaulting tenant is not occupying
any other HP of the assessee.
 Legal proceeding have taken or the AO is
convinced about the futility of the same.
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12. 1. Part of the HP is let out.
2. Let out but vacant during part of the year.
3. Let out but vacant during whole of the year.
4. Let out but self occupied during part of year.
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13. Calculate GAV proportionately.
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14. 1. Calculate GAV per month .
2. Multiply such GAV by the no. of months
for which it was occupied.
This will be the GAV of the HP.
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15. GAV is nil provided the HP has the
characteristic of a let out property.
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16. 1. Calculate the GAV as if the property
was let out for entire year.
2. No benefit for the period for which it
was self occupied.
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17.  Section 24(a) – 30% of Net Annual Value.
 Section 24(b)- Interest on borrowed
capital. Interest on capital borrowed for
construction, acquisition, repair, renewal,
reconstruction is allowed as deduction.
For let out property – No limit.
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18. For Self Occupied Property.
 Loan taken before 01-04-99, maximum
Rs.30,000/-
 Loan taken on or after 01-04-99, maximum
Rs.1,50,000/- Conditions apply.
 Loan taken on or after 01-04-1999 for
other purposes Maximum Rs. 30,000/-
 Interest for preconstruction period – in 5
equal installments.
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19. If the shares of the owners are
definite and ascertainable
 All parties will be treated as owners.
 Not assessed as AOP.
 All limits would apply separately.
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20.  Such amount would be charged to tax
under HP in the year of recovery, and
deduction u/s 24 allowed.
 Ownership of the property at the time
of recovery is not relevant.
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21.  Arrears of rent charged under HP
head in the year of receipt .
 Deduction u/s 24(a) available.
 Ownership of the property at the
time of receipt not relevant.
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22. THANK YOU
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