Advance Learning on Income from House Property (Practical)

Meaning of House Property:House property consists of any building or land appurtenant thereto of which the assessee is
the owner. The appurtenant lands may be in the form of a courtyard or compound forming
part of the building. But such land is to be distinguished from an open plot of land, which is
not charged under this head but under the head Income from Other sources or Business
Income, as the case may be. Besides, house property includes flats, shops, office space,
factory sheds, agricultural land and farm houses.
Further, house property includes all type of house properties, i.e., residential houses,
godowns, cinema building, workshop building, hotel building, etc.
Example:- Mr. X has one big house. It includes vast open area within its boundaries. The
house has been let out at a rent of Rs. 1,00,000 p.m., out of which rent of Rs. 25,000 p.m. is
attributable to the open land. In this case, entire rental income is taxable under the head house
property.
Essential conditions for taxing income under this head
Income from house property is taxable in the hands of its legal owner in whose name the
property stands. Owner for this purpose means a person who can exercise the rights of the
owner not on behalf of the owner but in his own right. A person entitled to receive income
from a property in his own right is to be treated as its owner, even if no registered document
is executed in his name.
The following three conditions must be satisfied before the income of the property can be
taxed under the head Income from House Property:

The property must consist of buildings and lands appurtenant thereto;

The assessee must be the owner of such house property;

The property may be used for any purpose, but it should not be used by the owner for
the purpose of any business or profession carried on by him, the profit of which is chargeable
to tax. If the property is used for own business or profession, it shall not be chargeable to tax.
Ownership includes both free-hold and lease-hold rights and also includes deemed ownership
Tax Chargeability [Sec. 22]
The annual value of property consisting of any building or lands appurtenant thereto of which
the assessee is the owner shall be subject to Income-tax under the head Income from House
Property after claiming deduction under Sec. 24, provided such property or any portion of
such property is not used by the assessee for the purpose of any business or profession,
carried on by him, the profits of which are chargeable to Income-tax.
Deductions from income from house Property [Sec.24]
Income chargeable under the head Income from house property shall be computed after
making the following deductions, namely:-

source : www.trpscheme.com

(As amended by Finance Act, 2013)