Income Tax : The framework clarifies that only owners or deemed owners are liable to tax under this head. Computation depends on annual value a...
Income Tax : The issue covers taxation and computation of house property income under the new law. The key takeaway is clarity on annual value,...
Income Tax : A simple guide to the five heads of income under the Income Tax Act, 1961, explaining salary, house property, business income, cap...
Income Tax : This article explains how annual value is calculated under Section 23 and why it forms the foundation of taxable income from house...
Income Tax : This guide explains how Section 22 taxes house property based on annual value rather than actual rent. It covers computation steps...
Income Tax : From April 1, 2025, rental income from house properties must be reported under "Income from House Property," not as business incom...
Income Tax : While presenting interim Budget 2019-20 FM proposed to exempt the levy of income tax on notional rent on a second self-occupied ho...
Income Tax : Tax on rental income - The rental income is added to the taxable income and tax liability is based on the tax slabs. Up to 30 perc...
Income Tax : The ITAT Mumbai ruled that an AO cannot reclassify rental income as business income if it was consistently assessed as income from...
Income Tax : ITAT Delhi rules rental income from leased property is taxable as 'House Property' for IHDP Globals, upholding consistency rule in...
Income Tax : Gujarat HC ruled that rental income from a property held as stock-in-trade by a construction business is business income, not inco...
Income Tax : ITAT Mumbai clarifies tax on builders' unsold inventory, stating no deemed rental income on stock-in-trade. Also addresses 80G ded...
Income Tax : Income Tax Appellate Tribunal (ITAT) Pune recently ruled that notional rent on unsold flats held as stock-in-trade by a builder ca...
In the case of Mukherjee Estate P. Ltd. reported in 244 ITR 1, the Hon’ble Calcutta High Court has held that income on account of display of hoardings on the top of the building for advertisement purposes to display the advertisement is not an income from house property as hoardings do not form part of the building which is income from the house property and other parts of the building.
Under the Income Tax Act what is taxed under the head ‘Income from House Property’ is the inherent capacity of the property to earn income called the Annual Value of the property. The above is taxed in the hands of the owner of the property.
The Direct tax Code Bill 2011 (DTC), has given relief to the property owners on two major account, firstly, no deemed taxation for House Property and secondly, deduction for interest for self occupied house property.’ While, the concept of deemed taxation of more than one house property has been done away with and their expectation of a simple mechanism of taxation of rental income has also been considered to a great extent.
In this Article we are discussing below the frequently asked question by taxpayers on Income Tax related to Taxable Income, General Question, Tax on Income, Return of income, PAN, Salary Income, Income from House property, Income from business and Profession, Capital Gains, Tax Deduction at Source and Assessment which will provide an insight to the laymen on income tax provisions.
ITO vs. Shanaya Enterprises (ITAT Mumbai) – Merely because income is attached to any immovable property cannot be the sole factor for assessment of such income as income from property; what has to be seen is what was the primary object of the assessee while exploiting the property. If it is found, applying such test, that main intention is for letting out the property, or any part thereof, the same must be considered as rental income or income from property. In case, it is found that the main intention is to exploit the immovable property by way of complex commercial activities, in that event, it must be held as business income.
CIT vs. Moni Kumar Subba (Delhi High Court – Full Bench) – If Assessing Officer Finds that the actual rent received is less than the “fair/market rent‟ because the assessee has received abnormally high interest free security deposit, he can undertake necessary exercise in that behalf. However, by no stretch of imagination, the notional interest on the interest free security can be taken as determinative factor to arrive at the “fair rent”. Section. 23(1)(a) of Income Tax Act, 1961 does not mandate this.
In Circular 204 dated 24.7.1976, the CBDT has accepted that u/s 23(1)(a) the “sum for which the property might reasonably be expected to let from year to year” is the municipal valuation of the property. The same view that the Municipal valuation is the annual value u/s 23(1)(a) has been taken in CIT vs. Prabhabati Bansali 141 ITR 419 (Cal) & M.V. Sonavala vs. CIT 177 ITR 246 (Bom); The contrary view in Makrupa Chemicals 108 ITD 95 (Mum) & Baker Technical Services (P) Ltd 126 TTJ (Mumbai)(TM) 455 that annual value determined by the Municipal authorities is not binding on the AO while determining the annual value u/s 23(1)(a) if it can be shown that the rateable value under the municipal laws does not represent the correct fair rent cannot be followed in view of M.V. Sonavala 177 ITR 246 (Bom) where it was held that the rateable value under the municipal law has to be adopted as annual value u/s 23(1)(a); Note: The issue whether notional interest can be considered u/s 23(1)(a) is pending before the Full Bench of the Delhi High Court in CIT vs. Moni Kumar Subba
TAXATION OF EMPLOYMENT INCOME AND DEDUCTIONS: There is an increase in exemption limit for medical reimbursement from Rs 15,000 to Rs 50,000. On making contributions to any approved fund for himself/spouse/child, an individual is allowed a deduction of up to Rs 100,000 from his taxable income. A further deduction of up to Rs 50,000 in aggregate is allowed for contributions to specified life insurance/health insurance plans or incurring tuition fees for children.
Where property consisting of buildings or buildings and lands appurtenant thereto is owned by two or more persons and their respective shares are definite and ascertainable, such persons shall not be assessed as an A.O.P. (Association of Persons) but the share of each person in the income from the property as computed u/ss. 22 to 25 (i.e., Income from house property) shall be included in his total income.
A Revised Discussion Paper (RDP) on Direct Taxes Code (DTC) has been released by the CBDT on 15th June, 2010, taking into consideration the vital and critical issues raised by the various stakeholders on the DTC. It is extremely satisfying to note that six of the eleven significant issues identified in the RDP are as per the specific suggestions of the Direct Taxes Committee of the ICAI.
