Under the head 'Income from House Property' the basis of charge is the annual value of property.
The property: consists of any buildings or lands related that, of which the assessee is the owner, and which is not used for purposes of assessee business or profession.
(1) Buildings or lands related that . Under the head 'Income from House Property' income is computed on buildings and land appurtenant thereto. Land which is not related to any building does not come within the scope of this section. Income from such land is taxable under the head 'Income from Other Sources'.
The following are the exceptions to the general rule that income from house property is taxable under the head 'Income from House Property'.
(a) Building or staff quarters let out to employees and others. If the assessee lets out the building or staff quarters to the employees of business whose residence there is necessity for the efficient conduct of business, the rent collected from such employees is assessable as income from business and not as income from house property.
(b) If a building is let out to authorities for locating bank, post office, police station, etc., Income from such building will be assessable as income from business and not as income from house property, provided the dominant purpose of letting out the building is to enable the assessee to carry on his business more efficiently and smoothly.
(C) Paying-guest accommodation. It is assessable as business income.
(2) On its Annual Value. The income is computed on the basis of annual value of buildings and land appurtenant thereto and not on its rental income.
(3) The assessee should be the owner of the house property. It is only the owner of the house property, who is liable to pay tax, under this head of income. Where the assessee is the lessee of a building and he derives an income from subletting or reletting, it will be taxable under the head 'Income from Other Sources' and not under the head Income from House Property.
(4) It is not used for purposes of assessee's business or profession. If the property, or a portion of it is occupied by the assessee for the purpose of his own business or profession and the profits of such business or profession are assessable to tax, the annual value in respect of such property or portion of it is not taxable as income from house property and also nothing will be deductible as expenditure on rent of this premises in computing the profits of business or profession.
(1) Income from farm house
(2) Annual Value of one palace of ex-Indian Ruler.
(3) Income from property owned by:
(i) Local Authority;
(ii) Scientific Research Association;
(iii) Charitable Trust;
(iv) Political Party.
(4) Income from property used for assessee's own business or profession.
(5) Income from one self-occupied house.
(6) Income from house meant for self-residence but could not be occupied throughout the previous year on account of his service business or profession at any other place.
Income of a co-operative society from the letting of godowns or warehouses for storage of commodities meant for sale.
(1) Income from house property situated abroad:- Income from House Property situated in a foreign country is taxable only in case of residents. If foreign property is taxed in India it will be taxable under the head 'Income from House Property' and its annual value shall be computed as if the property is situated in India.
(2) Property owned by co-owners:- Where a property is owned by two or more persons jointly and their respective shares are definite and ascertainable, income from such property shall not be assessed on such persons as association of persons, but the share of each such person from the property shall be included in his respective total income.
(3) Composite Rent:- If a building is let out to a person along with other facilities (e.g., electricity, cooler, lift, water pump, water tax, etc.) for a composite rent and if the rent of the building can be separated from the rent of such facilities, the two rents will be separated and that belonging to the building only will be taxed under the head 'House Property and that which belongs to other facilities will be taxed under the head 'Other Sources'.
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