Income from House Property

Introduction This lesson deals with income, which falls under the head ‘Income from house property’. The scope of income charged under this head is defined by section 22 of the Income Tax Act and the computation of income falling under this head is governed by sections 23 to 27. All the provisions relating to tax treatment of income from house property are explained in this lesson. Objectives After going through this lesson, you will be able to understand: The meaning of house property Who is treated as owner of house property? The treatment of rental income from properties under different circumstances Determination of the annual value of a house property The expenses deductible from rental/notional income from house property Special treatment given to self-occupied house property Treatment of income/loss from house property. Basis of Charge (Section 22) The annual value of a property, consisting of any buildings or lands appurtenant thereto, of which the assessee is the owner, is chargeable to tax under the head ‘Income from house property’. However, if a house property, or any portion thereof, is occupied by the assessee, for the purpose of any business or profession, carried on by him, the profits of which are chargeable to income-tax, the value of such property is not chargeable to tax under this head. Thus, three conditions are to be satisfied for property income to be taxable under this head. The property should consist of buildings or lands appurtenant thereto. The assessee should be the owner of the property. The property should not be used by the owner for the purpose of any business or profession carried on by him, the profits of which are chargeable to income-tax. Applicability of Section 22 Buildings or lands appurtenant thereto approach roads to and from public streets, compounds, courtyards, backyards, playgrounds, kitchen garden,