UNIT-3-Income-from-House-Property. .pdf

GURU NANAK COLLEGE [AUTONOMOUS]
AFFILITED TO UNIVERSITY OF MADRAS
RE-ACCREDITED AT “A”GRADE BY NAAC
___________________________________________________________________________________
Welcome to Online Class
Subject: “INCOME TAX LAW AND PRACTICE”

INCOME TAX LAW & PRACTICE-I
UNIT- I: BASIC CONCEPTS
Income Tax Act 1961 & relevance of Finance Act – Definition of
important terms – Income, Person, Assessee, Assessment Year and
Previous Year – Broad features of Income
Residential status, Incidence of Tax & Basics of Charge:
Taxable entities – Classification of Residential Status of taxable
entities - Residential Status – Individual, firm, AOP, HUF and
Companies – Incidence of Tax.
EXEMPTED INCOMES: Classification of exempted incomes – Incomes
excluded from total income – Income forming part of total income
but exempted from Tax.
UNIT- II: INCOME FROM SALARIES
Different forms of salary – Provident Funds – Allowances –
Perquisites – Other items included in Salary – Qualifying amount for
deduction u/s 80(C).

UNIT- III: INCOME FROM HOUSE PROPERTY
Computation of Income from House Property – Let-out house – Self occupied
house – Deduction allowed from house property – Unrealized rent – Loss under the
head house property.
UNIT -IV: PROFITS AND GAINS OF BUSINESS AND PROFESSION
Introduction – Computation of profits and gains of business and profession –
Admissible deductions – Specific Disallowances – Depreciation – Loss under the
head business and profession.
UNIT- V: ADMINISTRATION OF INCOME TAX ACT
Income tax authorities – procedure for assessment – PAN (Permanent Account
Number) – Types of assessment.
PRESCRIBEDBOOKS:
Income Tax Theory, law and practice - T.S. Reddy & Dr. Y. Hari Prasad Reddy –
Margham publications.
Income Tax law and practice. – V.P.Gaur&D.B.Narang.
REFERENCE BOOKS:
1.Students Guide to Income tax – Dr.VinodK.SignHania&Dr.MonicaSighania –
Taxmann.
2. Income tax service tax & VAT – Dr.GirishAhuja&Dr.Ravi Gupta – Bharat law
house.

HEADS OF INCOME

Income from
Salary
Income from
House
Property
Income
from
Business or
Profession
Income from
Capital Gains
Income
From other
Sources

STATEMENT SHOWING INCOME FROM HOUSE PROPERTY
PARTICULARS LOP DLOP SOP
Gross Annual Value (GAV) XXX XXX XXX
Less:- Local Tax, Mu. Tax XXX XXX XXX
Net Annual Value (NAV) XXX XXX XXX
Less:- Specific deduction XXX XXX XXX
1.Std. dedu. (30% of NAV) XXX XXX XXX
2. Int. on Loan XXX XXX XXX
Taxable Income XXX XXX XXX
LOP – Let Out Property, DLOP – Deemed to be
Let out Property & SOP – Self occupied Property.
For SOP – NAV is always Nil

INCOME FROM HOUSE PROPERTY
Definition of the Head – Income from House Property (Sec 22)
The Income from houses, buildings, bungalows,
godowns etc., is to be computed and assessed to tax
under the head “Income from House Property”. The
income under the head is not based upon the actual
income from the property but upon the notional income
or the annual value of the building.
House Property Income = Annual Value of Building – Deductions
specified u/s 24.

For Income to be taxed as “Income from House Property”
the following points to be noted carefully.
1. Income from Building or Land situated in India
2. Annual Value u/s 23 (Annual Value = Annual Rental Value)
3. The Assessee should be the owner of the property
(Deemed owner of the Property)
a) An individual who transfer is house property to his or her spouse
or transfer to a minor child not being a married daughter
b) A member of a co-operative society to whom a building allotted
or leased under a house building scheme of the society.
c) A person who is allowed to take or retain the possession of
building
d) The holder of an impartible estate
e) A person who acquires any rights

4. It is not used for purposes of assessee’s business or profession
Important Points
a) House Property held as stock in Trade
b) House Property partner used by firm
c) House property held in the name of business but actually used
for business
5. Dispute about ownership– The person who receive the rent
shall be liable to pay tax
6. House Property situated in a foreign country
ROR - Taxable, RNOR or NR – Exempted but income received in
India and payable in India – Taxable for all cases
.

7. Cases when rental income from Building is not treated as house
property income
a) Letting out of house property for smooth conduct of assessee’s
business/ profession.
If a person let out any property for smooth conduct of business
or profession, the rental income from such house property shall
not be treated as house property income rather it shall be
treated as income under the head Business or Profession
Example1 Quarters let out to the employee’s own business or
profession
Example2 Building let out to a bank, Post Office, Police Station,
Excise Department and Police Department etc.

b) Income from sub-letting of house property
If a person occupies a building as tenant and let out full or
part of the hired building to another person, it is called sub-
letting.
c) Composite letting out of building along with furniture etc.
If a person let out building along with furniture, Plant,
Machinery and other facilities etc, for composite rent and
such composite rent is not separated between (a) rent of
building and (b) rent of other facilities then such composite
rent shall be income from other sources or if letting is a
business of the assesse then it is treated as income from
business or profession
d) Income from hotel business/ paying guest accommodation
Hotel used for business – Business Income
Hotel used for let out - House Property Income

Exempted Income from House Property
1. Agricultural House Property (Sec2(1)(c) – Exempted from tax
2. House Property held for charitable purposes (Sec 11) – Exempted
3. Self-occupied but vacant house - Sec 23(3)
4. House used for own business or profession
5. Property held by registered trade union (Sec – 10(24))
6. Income from house property held by following shall be exempted
a) House property held by local authority
b) House property held by Scientific research Institution
c) House property held at a political party
d) House property held by a University or any other educational
institution working for spreading education and not to earn profit
e) House property held by a hospital or medical institution working
for the spreading of medical services to people and are not meant
for earning profit.

Determination of Gross Annual Value (GAV)
Step: I 1. Municipal Renal Value – MRV XXX
2. Fair Rental Value – FRV XXX
(Which ever is Higher is value to be considered)
Step: II 1.Higher Value ( step:1) XXX
2.Standard Rent – SR XXX
(Which ever is Less is Expected Rental value – ERV)
Step: III 1. Expected Rental value – ERV XXX
2. Actual Rent Value - ARV XXX
(Which ever is more is value is GAV)
Gross Annual Value – GAV XXX

1.From the figures given below Calculate Expected Rental Value (ERV)
Rental value Case A
( Rs.)
Case B
( Rs.)
Case C
( Rs.)
MRV 30,000 30,000 30,000
FRV 36,000 36,000 36,000
Standard Rent N.A 33,000 42,000

1. Calculation of Expected Rental Value (ERV)
Rental value Case A
( Rs.)
Case B
( Rs.)
Case C
( Rs.)
MRV 30,000 30,000 30,000
FRV 36,000 36,000 36,000
Which ever is Higher 36,000 36,000 36,000
Standard Rent N.A 33,000 42,000
Which ever is lower is ERV 36,000 33,000 36,000

Calculation of Expected Rental Value (ERV)
Case: A MRV Rs.30,000
FRV Rs.36,000
SR NA
Which ever is Higher is ERV, ERV is Rs.36,000
Case: B MRV Rs.30,000
FRV Rs.36,000
Which ever is Higher is compare with Standard Rent
Higher value Rs.36,000
SR Rs. 33,000
Which ever is lower is ERV,ERV is Rs.33,000
Case: C MRV Rs.30,000
FRV Rs.36,000
Which ever is Higher is compare with Standard Rent
Higher value Rs.36,000
SR Rs.42,000
Which ever is lower is ERV,ERV is Rs.36,000

2.From the figures given below Calculate Expected Rental Value (ERV)
Rental value Case A
( Rs.)
Case B
( Rs.)
Case C
( Rs.)
MRV 1,08,000 1,30,000 1,28,000
FRV 1,20,000 1,20,000 1,20,000
Standard Rent 1,02,000 N.A 1,38,000

2. Calculation of Expected Rental Value (ERV)
Rental value Case A
( Rs.)
Case B
( Rs.)
Case C
( Rs.)
MRV 1,08,000 1,30,000 1,28,000
FRV 1,20,000 1,20,000 1,20,000
Which ever is Higher 1,20,000 1,30,000 1,28,000
Standard Rent 1,02,000 N.A 1,38,000
Which ever is lower is ERV 1,02,000 1,30,000 1,28,000

3.From the figures given below Calculate Annual Rental Value (ARV)
Rental value Case A
( Rs.)
Case B
( Rs.)
MRV 60,000 60,000
FRV 66,000 66,000
Standard Rent 69,000 69,000
Actual Rent 72,000 63,000

3. Calculation of Annual Rental Value (ARV)
Rental value Case : A ( Rs.) Case : B ( Rs.)
MRV 60,000 60,000
FRV 66,000 66,000
Which ever is Higher Compare with SR 66,000 66,000
Which ever is lower is ERV A 66,000 66,000
Actual Rent B 72,000 63,000
ARV (A or B which ever is higher) 72,000 66,000

4.From the figures given below Calculate Gross Annual Value (GAV)
Rental value House: A ( Rs.) House: B ( Rs.)
MRV 80,000 80,000
FRV 1,00,000 1,00,000
Standard Rent 70,000 1,20,000
Actual Rent 1,20,000 90,000

4. Calculation of Gross Annual Value (GAV)
Rental value House A ( Rs.) House B ( Rs.)
MRV 80,000 80,000
FRV 1,00,000 1,00,000
Which ever is Higher Compare with SR 1,00,000 1,00,000
Which ever is lower is ERV A 70,000 1,00,000
Actual Rent B 1,20,000 90,000
GAV (A or B which ever is higher) 120,000 100,000

5.From the figures given below Calculate Gross Annual Value (GAV)
Rental value A (Rs.) B (Rs.) C (Rs.) D (Rs.)
MRV 60,000 48,000 36,000 96,000
FRV 75,000 60,000 45,000 1,16,000
Real Rent 69,000 54,000 40,000 1,20,000
Standard Rent N.A 72,000 42,000 1,15,000

5.Calculation of Annual Rental Value (ARV)
Rental value A (Rs.) B (Rs.) C (Rs.) D (Rs.)
MRV 60,000 48,000 36,000 96,000
FRV 75,000 60,000 45,000 1,16,000
Which ever is Higher 75,000 60,000 45,000 1,16,000
Standard Rent N.A 72,000 42,000 1,15,000
Which ever is lower A 75,000 60,000 42,000 1,15,000
Real Rent 69,000 54,000 40,000 1,20,000
ARV 75,000 60,000 42,000 1,20,000

6. Mr.Prakesh has constructed a multistory building at Delhi consisting of 40
flat is let out @ 1,000p.m. The Municipal authorities have fixed the rental
value of this property as Rs.4,50,000. The owner bears the following
expenses:
Particulars ( Rs.)
Lift maintenance 12,000p.a.
Pump maintenance 8,000p.a.
Salary of Gardener or
Watchman 3,600p.a.
Swimming pool expenses 9,000p.a
Compute the Annual Rental Value of the property

Rental value (Rs.) (Rs.) (Rs.)
Municipal Rental Value 4,50,000
Actual Rent (40x1,000 x12) 4,80,000
Less: Lift Maintenance 12,000
Pump maintenance 8,000
Salary of Gardener or
Watchman 3,600
Swimming pool expenses 9,000 32,600 4,47,400
which ever is higher is ARV 4,50,000

7. Compute the Annual Rental Value in the following case:
Particulars ( Rs.)
Municipal Rental Value 48,000p.a.
Actual Rent Received 50,000p.a.
Lift and pump Maintenance charges paid
by owner 6,000p.a.
Salary of common Gardener and
Watchman paid by tenants to the owner
500p.m
actual expenses incurred by the owner
during the year are Rs.4,200

Rental value Rs.) (Rs.) (Rs.)
Municipal Rental Value 48,000
Actual Rent (40x1,000 x12) 50,000
Less: Lift and Pump maintenance 6,000 6,000 44,000
which ever is higher is ARV 48,000
Salary of common Gardener and
Watchman paid by tenants to the owner
6,000
actual expenses incurred by the owner
during the year
4,200 1,800
Income from other sources 1,800

8.From the figures given below Calculate Annual Rental Value (ARV)
a) House was vacant for Full Years during the previous year 2019-20
b) House was vacant for Two months during the previous year 2019-20
c) Actual Rent of the house is Rs.4,000p.m. and was vacant for 2months
Rental value ( Rs.)
MRV 60,000p.a.
FRV 66,000p.a.
Actual Rent 7,000p.m.
Standard Rent 69,000p.a

Rental value Case: B ( Rs.) Case: C ( Rs.)
MRV 60,000 60,000
FRV 66,000 66,000
Which ever is less is ERV A 66,000 66,000
Actual Rent (7,000x12) (4000 X12) B 84,000 48,000
Less: Loss due to Vacancy 14,000 8,000
Annual Rental Value - ARV 70,000 58,000

9. Calculate Annual Rental Value (ARV) from the particulars given below:
During the previous year assessee could not realise the rent for 2months
Rental value ( Rs.)
MRV 60,000p.a.
FRV 66,000p.a.

Rental value ( Rs.)
MRV 60,000
FRV 66,000
Which ever is Higher Compare with SR 66,000
Standard Rent 69,000
Which ever is less is ERV A 66,000
Actual Rent (7,000x12) 84,000
Less: unrealised rent (7,000 x 2) 14,000
Actual Rent B 70,000
ARV - ( A or B Which ever is more) 70,000

10. Calculate Annual Rental Value (ARV) from the particulars given below:
During the previous year assessee could not realise the rent for 2months
Rental value ( Rs.)
MRV 60,000p.a.
FRV 66,000p.a.

Rental value ( Rs.)
MRV 60,000
FRV 66,000
Actual Rent (6,000x12) 72,000
Less: unrealised rent (6,000 x 2) 12,000
Actual Rent B 60,000
ARV - ( A or B Which ever is more) 66,000

11 a) Calculate Annual Rental Value (ARV) from the particulars given below:
Assessee could not realise the rent for 2months and also remained
vacant for 2months during the previous year 2019-20.
b) What difference it would make if every thing else remaining the same
but actual rent is Rs.6,000p.m.
Rental value ( Rs.)
MRV 60,000p.a.
FRV 66,000p.a.

Rental value Case: A ( Rs.) Case: B ( Rs.)
MRV 60,000 60,000
FRV 66,000 66,000
Which ever is less is ERV A 66,000 66,000
Actual Rent (7,000x10) (6000 X10) B 70,000 60,000
Less: Loss due to Vacancy 14,000 12,000
Annual Rental Value - ARV 56,000 54,000

12) Compute Annual Rental Value (ARV) from the particulars given below:
Rental value ( Rs.)
MRV 60,000p.a.
FRV 66,000p.a.
Date of Completion 31-05-2019
Date of letting 1-08-2019

Rental value ( Rs.)
MRV (60,000 x 10/12) 50,000
FRV (66,000 x 10/12) 55,000
Standard Rent (63,000 x 10/12) 52,500
Real Rent (6,000x10) B 60,000
Which ever is Higher is ARV 60,000
Less: Loss due to vacancy (6000 x 2) 12,000
Annual Rental Value - ARV 48,000

13) Compute Annual Rental Value (ARV) from the particulars given below:
Rental value ( Rs.)
MRV 84,000p.a.
FRV 90,000p.a.
Real Rent 8,000p.m.
Unrealised Rent 4,000
Date of Completion 31-07-2019

Rental value ( Rs.)
MRV (84,000 x 8/12) 56,000
FRV (90,000 x 8/12) 60,000
Standard Rent (87,000 x 8/12) 58,000
Real Rent (8,000x8 - 4,000) B 60,000
Less: Loss due to vacancy (8,000 x 2) 16,000
Annual Rental Value - ARV 44,000

14. From the particulars given below, Calculate Net
Annual Value for the previous year ending 31-3-2020.
A. MRV ( Date of Completion is 1-07-2018) 60,000p.a.
Actual Rent received 72,000p.a.
Tax levied by local authority and paid by owner
a) House Tax 6,000p.a.
b) Sanitation Cess 1,000p.a.
B. Date of completion 1-6-2019
Rent Received @ Rs.4,000p.m. 40,000p.a.
Municipal Tax are 10% of MRV
He paid 50% of taxes during the year 2019-2020.

14.A) Calculation of Net Annual Value (NAV)
Rental value ( Rs.)
Actual Rental Received 72,000
Less: Local Taxes:
a) House Tax 6,000
b) Sanitation Cess 1,000 7,000
Net Annual Value (NAV) 65,000

14.B) Calculation of Net Annual Value (NAV)
Rental value ( Rs.)
Date of Completion 1-6-2019(10 months)
Municipal Rental Value (36,000 x10/12) 30,000
Actual Rental Received (10 months) 40,000
Less: Municipal taxes (actually paid by owner)
50% of ( 3,6000*10% x 10/12) 1,500

15. Mr.D owns a house at Vijay Nagar and submit the
following particulars: Rs.
Municipal Valuation 1,70,000
Standard Rent 1,60,000
Rent Received 1,75,000
Fair Rental Value 1,72,000
Municipal Taxes 12% of MRV+2% Municipal Taxes
as Sanitation Surcharge
Compute the Net Annual Value

15. Calculation of Net Annual Value (NAV)
Rental value ( Rs.)
Municipal Rental Value 1,70,000
Fair Rental Value 1,72,000
Which ever is Higher is compared with SR 1,72,000
Standard Rent 1,60,000
Which ever is less is ERV 1,60,000
Actual Rent Received 1,75,000
Gross Annual Value (GAV) 1,75,000
Less: Municipal Tax (1,70,000 x 12%) 20,400
Sanitation tax (20,400 x 2%) 408 20,808
Net Annual Value (NAV) 1,54,192

16. Compute Income from House Property
Rs.
Rent Received 24,000
Municipal Taxes (50% paid by tenant) 1,800p.a.
Expenses incurred on repairs
a) By owner 3,000
b) By tenant 3,000
Collection Charges 1,000
Date of completion of house 1-6-1998
Compute the Net Annual Value

16. Calculation of Income from House Property
Rental value ( Rs.)
Actual Rent Received 24,000
Which ever is more is GAV 24,000
Less: Municipal tax (1,800 x 50%) 900
Deduction: u/s 24
1. Standard Deduction (30% of 23,100) 6,930
2. Interest on loan ---
Income from House Property 16,170

Interest on Loan
a) Self occupied House –
only one deduction of Interest on loan taken to purchase,
repairs, renovate construct the house + 1/5th of Pre-
construction interest.
on or before 1-4-1999 Rs.30,000 or actual interest (w.e.l)
on or after 1-4-1999 Rs.2,00,000 or actual interest (w.e.l)
b) Let out House -
Actual interest for the Previous Year 2019-20 + 1/5th of
Pre-construction interest is allowed as deduction with no
limit. Interest on mortgage is not allowed as deduction
unless the purpose of the loan connected with house.

17. Compute Income from House Property from the
particulars given below for the A.Y.2020-21.
Particulars Rs.
Rent Received 30,000
Municipal Taxes 2,400p.a.
Fire insurance Premium (due) 400p.a.
Ground Rent (due) 600p.a.
Interest on loan taken to construct the house
2013-14 to 2018-19 15,000p.a.
2019-20 10,000p.a.
Interest on delayed payment interest 1,000
Date of completion 31-3-2016

Rental value ( Rs.)
Actual Rent Received 30,000
Less: Municipal tax 2,400
Deduction: u/s24 1. S.D. (27,600 X 30%) 8,280
2. Interest on loan for P.Y 2019-20 10,000
Pre-construction Interest (15,000+15,000 x 1/5) 6,000

18.MRV of the residential house is Rs.24,000 and
actual rent is Rs.2,500p.m. During the previous year
2019-20 house was vacant for two months. The
Municipal Taxes are @10% of MRV. During the year
owner paid Rs.30,000 as arrears of Municipal Taxes.
Interest on loan taken for the construction of house
payable to his employer is Rs.16,000. Compute
Income from House Property.

Rental value ( Rs.)
Actual Rent Received (2,500 x 12) 30,000
Less: Loss due to vacancy 5,000
Annual Rental Value (ARV) 25,000
Less:M. tax(24,000 x 10% + Arrears Rs.30,000) 32400
Net Annual Value (Negative) (7,400)
Less: Deduction: 1. S.D (30% of NAV) ---
2. Interest on loan 16,000
Loss from House Property (23,400)

19. Mr.S owner house property of Cochin. It consists of 3
independent units and information about the property is given
below: UNIT 1: Own residence
UNIT2 : Let out
UNIT3 : Own Business Rs.
MRV 1,20,000p.a.
FRV 1,32,000p.a.
Standard Rent 1,08,000p.a.
Unrealised Rent ( 3months) 3,500p.m.
Repairs 10,000p.a.
Insurance 2,000p.a.
Interest on money borrowed for the
Construction of property 96,000p.a.
Municipal tax 14,400p.a.

Rental value Own Residence Let out ( Rs.) Own Business
MRV (1,20,000 x 1/3) 40,000
FRV (1,32,000 x 1/3) 44,000
Which ever is Higher 44,000
Standard Rent (1,08,000 x 1/3) 36,000
Which ever is lower is ERV 36,000
Actual Rent – unrealised rent
42,000 – (3,500 x 3) 31,500
Less: M. Tax (14,400 x 1/3) 4,800
Net Annual Value - NAV NIL 31200 NIL

Net Annual Value - NAV NIL 31200 NIL
Deduction u/s 24
1. S.D (30% of NAV) --- 9,360 ---
2. Interest on loan
(96,000 x 1/3) 32,000 32,000 ---
Loss from House Property (32,000) (10,160) NIL
Total Loss from H.P (42,160)

20. Following are the particulars of 2 let out house of Mr.Arul
Rental value House: A ( Rs.) House B ( Rs.)
MRV 4,20,000 3,50,000
FRV 3,60,000 3,80,000
Standard Rent 4,40,000 3,20,000
Actual Rent 4,80,000 4,20,000
Unrealised rent for the current year 40,000 70,000
Vacancy 2 months 1 month
Municipal tax Actually paid 12,000 35,000
Due but not paid 30,000 10,000
Repairs 10,000 8,000
Insurance Premium 12,000 6,000
Other expenses 8,000 10,000
Interest on money borrowed for the purchase of House
Determine Mr. Arul’s Income from House Property
--- 60,000

20. Computation of House Property Income of Mr.Arul A.Y.2020-21
MRV 4,20,000 3,50,000
FRV 3,60,000 3,80,000
Which ever is higher is to be considered 4,20,000 3,80,000
Higher Value 4,20,000 3,80,000
Standard Rent 4,40,000 3,20,000
Which ever is less is ERV 4,20,000 3,20,000
Actual Rent –UR (4,80,000-40,000) (4,20,000-70,000) 4,40,000 3,50,000
Which ever is higher is GAV 4,40,000 3,50,000
Vacancy ( House A - 2 months) ( House – B 1 month) 80,000 35,000
Annual Rental Value ARV 3,60,000 3,15,000
Municipal tax Actually paid 12,000 35,000
Net Annual Value - NAV 3,48,000 2,80,000

20. Following are the particulars of 2 let out house of Mr.Arul
Net Annual Value - NAV 3,48,000 2,80,000
Deduction u/s 24
1. S.D (30% of NAV) 1,04,400 84,000
Income from Let out House 2,43,600 1,36,000
House A 2,43,600
House B 1,36,000
Total Income from House Property 3,79,000

21. Mr. P is the owner of the house property in Rourkela. It has
been let out for Rs.90,000. The tax payable by the owner comes
to Rs.8,400 on Municipal Valuation of Rs.84,000 but the landlord
has taken an agreement from the tenant stating that tenant
would pay tax direct to the municipality. The landlord, however,
bears the following expenses on tenant’s amenities: Rs.
1. Water charges ( as per the agreement) 1,000
2. Lift Maintenance 1,000
3. Salary of Gardener 1,200
4. Lighting of Stairs 800
The Landlord claims the following deductions
1. Repairs 30,000
2. Land Revenue 1,000
3. Collection Charges 2,000
4. Legal Charges incurred on purchase of land on
Which house property situated 24,000
Compute the taxable income from house property

21. Computation of House Property Income of Mr.P A.Y.2020-21
Rental value ( Rs.)
Annual Rental Value 90,000
Less: Expenses met by landlord on amenities provided to the tenants
1. Water charges ( as per the agreement) 1,000
2. Lift Maintenance 1,000
3. Salary of Gardener 1,200
4. Lighting of Stairs 800 4,000
Real Rent 86,000
MRV 84,000
Which ever is higher is GAV 86,000
Less: Municipal taxes NIL
Net Annual Value - NAV 86,000
Deduction: u/s 24 (30% NAV) (86,000 X 30%) 25,800

22. The house was completed on April 1, 2019 and the
following information is available about this house:
Fair Rental Value 32,000p.a.
Municipal taxes 6,000p.a.
Let out for the period 1-4-2019 to 31-12-219 and self
occupied from 1-1-2020 onwards
Fire Insurance Premium 3,600
Land Revenue 6,000
Interest on loan for the period
a) 1-4-2016 to 31-3-2019 45,000
b) 1-4-2019 to 31-3-2020 15,000
Calculate income from house property for the P.Y 2019-20.

22. Computation of Income from House Property for A.Y.2020-21
Rental value ( Rs.)
Municipal Rental Value( treated as lot out) 30,000
Fair Rental Value 32,000
Which ever is Higher IS ERV 32,000
Actual Rent Received (4,000 X 9) 36,000
Less: Municipal Taxes 6,000
Deduction: u/s 24 1. S.D (30% of 30,000) 9,000
Interest on loan (15,000 + 1/5th of PIC (45,000 X 1/5) 24,000

Interest on Loan
a) Self occupied House –
only one deduction of Interest on loan taken to purchase,
repairs, renovate construct the house.
a) If loan is taken for acquiring and constructing house on
or before 1-4-1999 Rs.30,000 or actual interest (w.e.l)
b) If loan is taken for acquiring and constructing house on or
after 1-4-1999 Rs.2,00,000 or actual interest (w.e.l)
b) Let out House -
Actual interest for the Previous Year 2019-20 + 1/5th of
Pre-construction interest is allowed as deduction with no
limit. Interest on mortgage is not allowed as deduction
unless the purpose of the loan connected with house.

Case
Date of
Loan
(DOL)
Date of
Repayment
(DOR)
Date of
Completion
(DOC)
Pre-
construction
Period (PCP)
A 1-8-2015 01-07-2020 Nov – 2020 1-8-2015 -1-7-2020
B 1-8-2015 21-06-2021 Dec – 2020 1-8-2015- 31-3-2020
C 1-8-2015 20-06-2021 Feb – 2020 1-8-2015 -31-3-2019

23. From the particulars given below compute income
from house property which consists of two
independent units having 1/3rd and 2/3rd area.
Self-occupied 2/3 portion
Let out 1/3portion
From 1-4-2019 to 31-8-2019@Rs.7,200 p.m.
And self-occupied from 1-9-2019 onwards.
Fire Insurance Premium 2,000p.a.
Ground Rent 4,000p.a.
Interest on loan 7,500p.a.

Rental value (1/3rd House (unit 2) let out ) ( Rs.)
MRV (96,000 x 1/3) 32,000
FRV (84,000 x 1/3) 28,000
Which ever is Higher IS ERV 32,000
Actual Rent Received (7,200 X 5) 36,000
Less: Municipal Taxes (1/3 of 6,000) 2,000
2.Interest on loan (1/3 of Rs.7,500) 2,500

Rental value ( Rs.)
2/3rd House (unit 1) under own construction
Net Annual Value (NAV) NIL
Less: Deduction: u/s 24 1. S.D (30% of NAV) NIL
Interest on loan (2/3 of Rs.7,500) 5,000
Unit: 1 (2/3 own construction) Loss (5,000)
Unit: 2 (1/3 Let out) Income from House Property 21,300

24. Following are the particulars of two house properties owned by Narain.
Rental value House A ( Rs.) House B ( Rs.)
MRV 96,000 90,000
FRV 88,000 96,000
Actual Rent Received 9,000p.m. 10,000p.m.
Self occupied (1-4-19 to 30-11-19) (1-12-19 to 31-03-20)
Let out (1-12-19 to 31-03-20) (1-4-19 to 30-11-19)
Municipal tax –Due 6,000 8,000
- paid 3,000 NIL
Interest on borrowed money 10,000 42,000
Loan taken to construct House II is still outstanding loan was taken in 1998
Find out Mr. Swami’s Income from house property.

24. Following are the particulars of two house properties owned by Narain.
House A ( Rs.) House B ( Rs.)
MRV 96,000 90,000
FRV 88,000 96,000
Which ever is less is ERV 90,000 96,000
Actual Rent A (9,000x4) B (10,000 X8) 36,000 80,000
Less: Municipal taxes (paid) 3,000 NIL
Net Annual Value – NAV 87,000 96,000

Where a house property is self-occupied for a part of
the year and let out for remaining part of the year the
benefit of self-occupancy u/s 23 (2)(a) is not
available and the income of such a house property will
be computed as if the house is let out.
Net Annual Value – NAV 87,000 96,000
Deduction: u/s 24 1.S.D ( 30% of NAV) 26,100 28,800
2. Interest on loan 10,000 42,000
Income from House Property 50,900 25,200

25. Mr. Raghav owns a residential house property. It is two
equal residential units – Unit-I and Unit –II. While Unit I is self
occupied by Raghav for his residential purpose; Unit II is Let out
(rent being Rs.6,000p.m, rent two months could not be
recovered). Municipal value of the property is Rs.1,30,000,
standard rent is Rs.1,25,000 and fair rent is Rs.1,40,000.
Municipal tax is imposed at 15% which is paid by Raghav. Other
expenses for the previous year 2019-20 being repairs Rs.800,
Insurance Rs.1,500, interest on Loan (borrowed during 1998)
for constructing the property Rs.63,000p.a.
Compute the taxable income of Mr.Raghav for the A.Y.2020-21.

25.Computation of Income from H.P of Mr. Raghav for the A.Y. 2020-21
Rental value(two equal residential units of a
house are treated separate house
Let out ( Rs.) Self occupied
MRV (1,30,000 x 1/2) 65,000
FRV (1,40,000 x 1/2) 70,000
Standard Rent (1,25,000 x 1/2) 62,500
Actual Rent (6000x12 – UR 6000X2) 60,000
Less: M. Tax (65,000 x 15%) 9,750
Net Annual Value – NAV 52,750 NIL

25.Computation of Income from H.P of Mr. Raghav for the A.Y. 2020-21
Rental value(two equal residential units of a
house are treated separate house
Let out ( Rs.) Self occupied
Less: Deduction: u/s 24 1.S.D(30% of NAV) 15,825 ---
Interest on loan (63,000 x 1/2) 31,500 30,000
Let out – Income from House Property 5,425
Self occupied – Loss from House Property (30,000)
Net Loss from House Property (24,575)

26. The particulars of residential house completed on 31st may,
2017 are given below:
Rs.
1. Rent 800p.m.
2. Municipal tax paid 1,800
3. Ground Rent 50
4. Insurance 80
5. Interest on amount borrowed for construction of this house 1,000
6. Collection Charges 300
The asessee mortgaged the house for Rs.36,000 to meet the
expenses of his daughter’s marriage and paid on interest of
Rs.3,000 of the mortgage loan during the year. The assessee also
claimed that he has not realised rents from his tenants for earlier
years to the extent of Rs.2,000 and he proved his claim to the
entire satisfaction of the Assessing Officer that the conditions for
its admissibility were satisfied. Compute the Income from the
head House property of the assessee for the year.

Rental value (Let out House) ( Rs.)
Rent (800 x 12) 9,600
Less: Unrealised Rent 2,000
GAV 7,600
Interest on Mortgage shall not be allowed as money received has
been utilised to meet the expenses of his daughter’s marriage

27. Mr. Joseph is owner of a residential house construction of
which was completed on 31-10-2011 and it has been let out
from 1-12-2011 for residential purposes, Its other
particulars are: Rs.
Standard Rent under rent control act 1,500p.m.
Municipal taxes paid (including Rs.1,500 paid by tenant) 2,500
Water and Sewerage benefit tax levied by the state
Government not paid yet as it is disputed in appeal 1,200
Fire Insurance payable 600
Legal charges for recovery of rent 1,500
Stamp duty and Registration charges incurred in
Respect of lease agreement of the house. 3,000
The unrealised rent for the year 2017-18 amounted to Rs.16,000
Out of which a deduction has been claimed for Rs.12,000.During the year
Rs.14,000 were recovered from the defaulting tenant. Compute income from
house property for the P.Y 2019-20.

27. Computation of Income from House Property for P.Y.2019-20
Municipal Rent 15,000
Which ever is higher is compare with S.R 18,000
Actual Rent (1,600 x 12) 19,200

Income from Let out House Property 12,740
Deemed Income from House Property
Unrealised rent recovered and allowed earlier deduction
(14,000-4,000) 10,000
Less: 1.S.D. (30% of NAV) (30% of 10,000) 3,000 7,000
Income from head House Property 19,740

28. Mr. X has 3 House properties which he was uses for own residential Purpose:
House I ( Rs.) House II ( Rs.) House III ( Rs.)
MRV 40,000 60,000 80,000
FRV 50,000 70,000 65,000
Standard Rent 60,000 84,000 72,000
Municipal taxes 4,000 6,000 9,000
Expenses on repairs 2,000 4,000 3,000
Insurance Premium 1,000 2,500 3,000
Year in which loan taken for Purchase of House 1998 2002 2007
Interest on loan paid during the P.Y 2019-20 35,000 40,000 25,000
Find out income from H.P as tax expert

28. Computation of Income from House Property
Assessee is allowed the benefit of self-occupancy (where
the NAV is NIL) in case two residential houses and other
House or houses are treated as let out (Deemed to be let
out) house or houses. Two house treated as self-occupied
and which is to be treated as Let-out. First of all let all
the houses be treated as self-occupied ones
All 3 houses treated as Self-occupied House 1 House 2 House 3
Net Annual Value – NAV NIL NIL NIL
Deduction: u/s 24
1.S.D.( 30% of NAV) NIL NIL NIL
2. Interest on loan (30,000) (40,000) (25,000)
Loss from House Property (30,000) (40,000) (25,000)

28. Computation of Income from House Property of Mr. X for the A.Y.2020-21
Particulars (All 3 Houses treated as Let out) House I House II House III
MRV 40,000 60,000 80,000
FRV 50,000 70,000 65,000
Which ever is Higher is Compared with S.R 50,000 70,000 80,000
Standard Rent 60,000 84,000 72,000
Which ever is lower is ERV 50,000 70,000 72,000
GAV 50,000 70,000 72,000
Municipal taxes 4,000 6,000 9,000
NAV 46,000 64,000 63,000
Deduction: u/s 24 1.S.D( 30% of NAV) 13,800 19,200 18,900
2. Interest on borrowed money 35,000 40,000 25,000
Income / Loss from House Property (2,800) 4,800 19,100

28. Computation of Income from House Property of Mr. X for the A.Y.2020-21
Particulars
OPTION I (H1 &H2
SELF & H3 Deemed
to be Let-out)
OPTION II (H1 &H3
SELF & H2 Deemed to
be Let-out)
OPTION III ( H2 &H3
SELF & H1 Deemed to
be Let-out)
House I -30,000 -30,000 -2,800
House II -40,000 +4,800 -40,000
House III +19,100 -25,000 -25,000
Loss from H.P (50,900) (50,200) (67,800)
Since the loss under the head of house property is maximum
under the option III. Hence X should opt for option III (House
2&3 Self-occupied and House 1 is Deemed to be Let-out).
Loss under the head of HP 67,800 shall be either setoff against
other income of current previous year as per rule or will have to
be carried forward to next 8 assessment years.

29. Mr.S.M.Krishna owner of the big house consisting of 3 equal
Independent units. Unit 1 is Let out at a rent of Rs.8,000 p.m. Unit
II is being used in owner’s own business. Whereas Unit III is being
used for own residence. Other particulars of the house are as
follows. Rs.
Municipal Rental Value 1,50,000p.a.
Fair Rental Value 1,95,000p.a.
Standard Rent as per rent control act 1,86,000p.a
Repairs 12,000p.a.
Interest on borrowed money 60,000p.a
Unit I remained vacant for 2 months and one month rent could not
be realised from a tenant. Mr. Krishna’s Income from his business
without debiting any expenditure related to own business being
used in his own business is Rs.2,00,000
Determine Krishna’s income from house property and business for
the A.Y 2020-21.

MRV (1,50,000 x 1/3) 50,000
FRV (1,95,000 x 1/3) 65,000
Standard Rent (1,86,000 x 1/3) 62,000
Actual Rent – unrealised rent
(8,000 X 12 ) – (8,000 x 1) 88,000
Less: Loss due to Vacancy 16,000
Gross Annual Value – GAV NIL 72,000 NIL

Gross Annual Value - GAV NIL 72,000 NIL
Less: M. Tax (15,000 x 1/3) 5,000
Net Annual Value - NAV NIL 67,000 NIL
Deduction u/s 24
1. S.D (30% of 67,000) --- 20,100 ---
2. Interest on loan
(60,000 x 1/3) 20,000 20,000 ---
Loss from House Property (20,000) 26,900 NIL
Total Loss from H.P 6,900

Business Income Own Business
Profit (given) 2,00,000
Less: Expenses related to Unit III
(not to be account earlier)
Municipal Tax (15,000 x 1/3) 5,000
Repairs (12,000 x 1/3) 4,000
Interest on borrowed money (60,000 x 1/3) 20,000 29,000
Business Profit 1,71,000
Income from Business 1,71,000
Gross Total Income 1,77,900

30. Mr.Gulati owns following 4 house properties. Other particulars are as follows:
Rental value A (Self
occupied)
B (Self
occupied)
C (Let out to be
a Business House)
D (Being used for
Own Business)
MRV 20,000 50,000 70,000 45,000
Standard Rent ---- ---- 72,000 48,000
FRV 26,000 60,000 80,000 50,000
Actual rent received ---- ---- 96,000 ----
Vacancy NIL NIL 1 Month NIL
Unrealised Rent ----- ----- 16,000 ----
Municipal Tax 2,000 2,000 6,000 4,000
Repairs 4,000 2,000 8,000 5,000
Interest on money borrowed 8,000 10,000 ---- ----

Mr. Gulati borrowed Rs.2,00,000 @12% for the construction of House
No. III on 1st October, 2015 and the house was completed in October
2017 and since then it is let out. A Part of the loan of Rs.50,000 was
repayed on 15th Oct, 2018. Determine the house property income of
Mr.Gulati.
House I & II Self-occupied
Net Annual Value – NAV NIL NIL
Deduction: u/s 24 1.S.D. ( 30% of NAV) NIL NIL
Less: 2. Interest on borrowed money (8,000) (10,000)
Loss from House Property (8,000) (10,000)

Municipal Rent 70,000
Which ever is higher is compare with S.R 80,000
Actual Rent (96,000 – Unrealised Rent 16,000) 80,000
Less: Loss due to vacancy (1 month Rs.8,000) 8,000
Gross Annual Value (GAV) 72,000

2. Interest on borrowed money
Previous Year 2019-20 (1,50,000 X 12%) 18,000
For Preconstruction Period 1-10-2015 to 31-3-2017
2015-2016 2,00,000 x 12% x 6/12 (for 6 months) 12,000
2016-2017 2,00,000 x 12% (for one year) 24,000
36,000
(36,000 x 1/5) 7,200 25,200
Income from Let out House Property 21,000
Net Income from H.P. (Self -18,000 + Let out 21,000) 3,000

Rental value ( Rs.)
2/3rd House (unit 1) under own construction
Net Annual Value (NAV) NIL
Less: Deduction: u/s 24 1. S.D (30% of NAV) NIL
Interest on loan (2/3 of Rs.7,500) 5,000
Unit: 1 (2/3 own construction) Loss (5,000)
Unit: 2 (1/3 Let out) Income from House Property 21,300

31. Mr.Ramachandran owns two house at chennai. Compute his income
from house property for the A.Y- 2020-21.
Rental value House A ( Rs.) House B ( Rs.)F
FRV 36,000p.a. 1,20,000p.a.
Actual Rent 4,000p.m. 12,000p.m.
MRV 40,000p.a. 1,30,000p.a.
Standard Rent 38,000p.a. N.A.
Municipal taxes 10% of MRV + 2% Municipal
Tax as sewerage cess
10% of MRV + 2% Municipal
Tax as sewerage cess
Actual repairs expenses 4,000 10,000
Ground Rent 2,000 2,500
Collection charges 500 1,200
Interest on Loan 12,000 48,000
Vacancy Period 3 months NIL
Bonafide Unrealised Rent C.Y ---- 36,000

Construction of House II Started on 1st November 2015 and
he borrowed Rs.4,00,000 @ 12% on 1st July 2016 for the
completion on construction. The house was completed on
30th Nov,2018 and since then it is let out.

31. Computation H.P Income of Mr.Ramachandran for the A.Y 2020-21.
House I ( Rs.) House II ( Rs.)
FRV 36,000 1,20,000
MRV 40,000 1,30,000
Which ever is Higher Compare with SR 40,000 1,30,000
Standard Rent 38,000 NIL
Which ever is less is ERV 38,000 1,30,000
Actual Rent A (4,000x12) B (12,000 X12 – 12,000X3) 48,000 1,08,000
GAV (A or B which ever is higher) 48,000 1,30,000
Less: Loss due to vacancy 12,000 NIL
Gross Annual Value – GAV 36,000 1,30,000

Gross Annual Value – GAV 36,000 1,30,000
Less: Municipal tax (10% of MRV) 4,000 13,000
Sewerage cess (2% of MT) 80 260
Net Annual Value - NAV 31,920 1,16,740
Deduction: u/s 24 1.S.D ( 30% of NAV) 9,576 35,022
2. Interest on loan
a) P.Y 12,000 48,000
b) 1/5 of PCI NIL 16,800
(4,00,000 X 12% X 1year & 9 months)
12,000 64,800
Income from House Property 10,344 16,918
Income from H.P (10,344+16,918) 27,262

32. Following are the particulars of two house properties owned by A & B.
Particulars Mr. B (Let out 9m + self 3m) B Let out ( Rs.) A - Self ( Rs.)
MRV (1,00,000 x 9/12) 75,000
FRV (72,000 x 9/12) 54,000
Which ever is Higher (A) 75,000
Actual Rent A (15,000x9) (B) 1,35,000
GAV (A or B which ever is higher) 1,35,000
Less: Loss due to vacancy (15,000 x 3) 45,000
Annual Rental value (GAV after vacancy) 90,000
Less: Municipal taxes (paid) 8,000

Particulars Mr. B (Let out 9m + self 3m) B - Let out ( Rs.) A Self ( Rs.)
Deduction: u/s 24 1.S.D( 30% of NAV) 24,600 NIL
2.Interest on loan (20L x 12% + 20L x 12% x1/5) 2,88,000
Loss from House Property (2,30,600)
Mr. A (Mr.A occupied entire house–self)
2. Interest on loan
(12L x10% + 12L X10% X9/12 X 1/5)
1,38,00 or 2,00,000 w.e.l
1,38,000
Total Loss from House Property
House A (2,30,600)
House B (1,38,000)

Particulars Mr. B (Let out 9m + self 3m) B Let out ( Rs.) A - Self ( Rs.)
MRV (1,00,000 x 9/12) 75,000
FRV (72,000 x 9/12) 54,000
Actual Rent A (15,000x6) (B) 90,000
GAV (A or B which ever is higher) 90,000

Particulars Mr. B (Let out 9m + self 3m) Let out ( Rs.) Self ( Rs.)
MRV (1,00,000 x 9/12) 75,000
FRV (72,000 x 9/12) 54,000
Actual Rent A (15,000x9) (B) 1,35,000
GAV (A or B which ever is higher) 1,35,000
Net Annual Value – NAV 1,27,000 NIL
Deduction: u/s 24 1.S.D( 30% of NAV) 38,100 NIL
2.Interest on loan (20L x 12% + 20L x 12% x1/5) 2,88,000 30,000
Loss from House Property (1,99,100) (30,000)
Mr. A (Mr. A occupied entire house – self ) (30,000)

33.Compute Mr.R’s Income from House Property for P.Y.2019-20
Rental value ( Rs.)
Gross Rental Income of the year (after deducting following items) 100,000
(i) Depreciation 24,500
(ii) Lift maintenance 7,500
(iii) Municipal tax (10% of MRV of Rs.1,50,000) 15,000
(iv) Vacancy 10,000
(v) Repairs 18,000
(vi) Pay of chowkidar 1,000
(vii) Bank commission 500
(viii) Legal expenses on recovery of rent 8,000
(ix) Salary of gardener 1,200

33.Computation Mr.R’s Income from H.P. for A.Y.2020-21
Rental value ( Rs.) ( Rs.)
Gross Rental Income of the year (after deducting
following items)
100,000
(i) Depreciation 24,500
(ii) Lift maintenance 7,500
(iii) Municipal tax (10% of MRV) 15,000
(iv) Vacancy 10,000
(v) Repairs 18,000
(vi) Pay of chowkidar 1,000
(vii) Bank commission 500
(viii) Legal expenses on recovery of rent 8,000
(ix) Salary of gardener 1,200 85,700
Actual Rent 1,85,700

Actual Rent 187,700
Less: Cost of facilities
(i) Lift maintenance 7,500
(ii) Pay of chowkidar 1,000
(iii Salary of gardener 1,200 9,700
Real Rent 1,76,000
Municipal Rental Valur 1,50,000
Which ever is Higher is GAV 1,76,000
Less: Loss due to Vacancy 10,000
Annual Rental Value (GAV after vacancy ) 1,66,000

Annual Rental Value (GAV after vacancy ) 1,66,000
Less: Municipal tax ( 10% of 1,50,000) 15,000
1,51,000
Less: Deduction u/s 24
1. Standard Deduction (30% of NAV) 45,300
2. Interest on loan NIL
Income from House Property 1,05,700

UNIT-3-Income-from-House-Property. .pdf

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