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House rent

santhosh kumar (Student CA IPC / IPCC) (47 Points)

04 December 2014

our clinte has 4 let out propertys and my quiery is one of them is vaccent for full year.

so, how should i treat it in their(client) income.

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11 Replies

CA SUKSHAM ARORA (CA) (569 Points)
Replied 04 December 2014

net annual value = 0 (for that property)

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Z ( ) (2965 Points)
Replied 04 December 2014

NAV shall not be zero

It shall be deemed that such property has been let out but no deduction will be provided as per clause (c)

There is a case also wherein it was held that if property is intended to be let out but couldn't be let out then the benefit of deduction under clause c shall not be given

If we take it as NIL, everyone will claim it as NIL saying property was intended to be let out,reasonable steps were also taken but it couldn't be let out.

Clause c of S.27(1)

"where the property or any part of the property is let out and was vacant during the whole
or any part of the previous year and owing to such vacancy the actual rent received or
receivable by the owner in respect thereof is less than the sum referred to in clause (a),
the amount so received or receivable, i.e., the actual rent, if any......"

I assure you that judgement on this exist, I'll try to post it

2 Like

CA Kanj Goel (Division Manager) (372 Points)
Replied 04 December 2014

Do agree with Mr. Z unless it is self occcupied property it shall be taxable under the head house property.

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chaitanya sandeep (CA - Articles) (35 Points)
Replied 04 December 2014

if house property not let out for more than 300 days then wealth tax will attract as per sec 2 (ea) of Wealth tax act

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chaitanya sandeep (CA - Articles) (35 Points)
Replied 04 December 2014

In your present case vacant for whole year so wealth tax may attract

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sekaar (student) (29 Points)
Replied 05 December 2014

It will not be taxable unless the owner has not occupied the property or the owner has not made any trail to let out the property

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santhosh kumar (Student CA IPC / IPCC) (47 Points)
Replied 05 December 2014

THANKS for all of you.

the property i mentioned thier is fully letout but no came for rent it is vaccent and how much of rent should i consider .

Z ( ) (2965 Points)
Replied 05 December 2014

Sir although it was intended to be fully let out, you took reasonable steps like putting an ad outside the property that it is available for letting, if you couldn't had vaccancy even for a month then am sorry, the benefit will not be provided to you.

If you want citations,I'll provide it to you

Sir I have cited the provision in my prvious post. I wish to ask only 1 question from you

WHAT IS THE ACTUAL RENT RECEIVABLE TO YOU? IN ABSENCE OF ANY AGREEMENT WITH THE TENANT or more appropriately in absence of tenant

What shall I take as your actual rent receivable.

For computation am citing a tutorial from the income tax site

https://www.incometaxindia.gov.in/Tutorials/Income-from-House-Property-Practical.pdf

Check page 5

2 Like

*RENU SINGH * (✩ §m!ℓ!ñġ €ม€§ fℓม!ñġ ђ♪gђ✩ ) (21627 Points)
Replied 05 December 2014

As the purpose was to let out the property and was consistently let out by the person ...so it shouldn't b treated as wealth tax in my opinion as well. I fully concur with the suggestions given by Mr.Z

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Z ( ) (2965 Points)
Replied 05 December 2014

Thanks ma'm for concuring but I beg to differ on your 1 point

any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometres from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include—

(1)		a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than 22a[ten] lakh rupees;
(2)		any house for residential or commercial purposes which forms part of stock-in-trade;
(3)		any house which the assessee may occupy for the purposes of any business or profession carried on by him;
(4)		any residential property that has been let-out for a minimum period of three hundred days in the previous year;
(5)		any property in the nature of commercial establishments or complexes;]

There is a circular which stipulates that letting out of property is not to be considered as carrying out a business.

So this property is also an asset for wealth tax purposes but however exemption may be claimed for residential house property as provided for in the Act