Conditions for taxing the income under this head (Sec. 22)
- The basis of chargeability under the head income from house property is Annual Value
- The property must consist of Building or Land Appurtenant thereto.
- Building includes not only residential building, but also factory building, offices, shops, Godowns and other commercial premises.
- Land appurtenant means land connected to building, like garden, garage etc.,
- The assessee must be the owner of such property
- The property may be used for any purpose other than the assessee’s business or profession.
Treatment of composite rent
- Meaning of composite rent: Composite rent is the rent charged in cases where the assessee does not merely let-out a property, but also provides other facilities.
- Tax treatment:
- Separately identifiable: Where building is let-out along with plant and machinery and amenities and the income towards building and other assets are separately identifiable, then the income from building shall be taxed under the head income from house property and the other income shall be taxed under the head business or profession.
- Not separately identifiable: If it is inseparable, the same will be liable to tax under the head income from other sources.
- Object of letting out: If from agreement between two parties, it was clear that the primary object was to let-out portion of said property with additional right of using furniture and fixtures and other common facilities, then rent charged from month to month is income derived from said property and is assessable as income from property..
Deemed owner
- Owner: An individual shall be considered as the owner of a property when the document of title to the property is in his name.
- Deemed owner: Under the following circumstances, “Income from House Property” is taxable in the hands of the individual, even if the property is not registered in his name-
- Where the property has been transferred to spouse for inadequate consideration other than in pursuance of an agreement to live apart.
- Where the property is transferred to a minor child for inadequate consideration (except a transfer to minor married daughter)
- Where the Individual holds an impartible estate
- Where the Individual is a member of Co-operative Society, Company, or other Association and has been allotted a House Property by virtue of his being a member, even though the property is registered in the name of the Society/ Company/ Association.
- Where the property has been transferred to individual’s name as part-performance of a contract.
- Where the Individual is a holder of a Power of Attorney enabling the right of possession or enjoyment of the property.
- Where the property has been constructed on a leasehold land.
- Where the ownership of the property is under dispute.
- Where the property is taken on a lease for a period of not less than 12 years, then the lessee shall be deemed as the owner of the property.
