If the rent recieved is less than expected rent( i.e. fair rent in this question) because of vacancy then rent recieved is GAV but if Rent recieved is not less than expected rent due to vacancy  then we take GAV as Expected rent

For Ex- Rent recieved= 1000pm and it is vacant for 5months

fair rent =800pm

then in this case Rent recieved=1000*7=7000

fair rent=800*12=9600

if there was no vacancy rent recieved would be

1000*12=12000 which is greater than Fair rent so in this case we will take

GAV=Rent recieved i.e. 7000

step 1 fair rent =1200*12=14400

{fair rent or munciple value which ever is higher but subject to maximum S.R.}

step 2 rent receive or receivable befor loss due to vacanceis = 12000

Step 3 1st or 2nd which is higher= 14400

STep 4 loss due to vacances 1000*5=5000

step 5 STEp3-STEp4(14400-5000=9400)(GAV)

gav less municiple tax paid by owener=NAV

Originally posted by : Arihanth Kumar Jain G
	Ms Pooja, your partly correct.9,400 NAV is acceptable but not u/s 23.   U/s 23(1) For the purposes of section 22, the annual value of any property shall be deemed to be—           (a)  the sum for which the property might reasonably be expected to let from year to year; or           (b)  where the property or any part of the property is let and the actual rent received or receivable   by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or           (c)  where the property or any part of the property is let 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 : Therefore unless we can prove that rent was received less due to vacancy only, no where section provides that vacancy rent part (i.e.5,000 in the query) can be allowed to be deducted from fair rent. Hence NAV becomes14,400.   However I believe there are expert opinions on the same & NAV can be as9400.

Sir

my calculation is purely on acedemic basis as method given in V. K . singhania I m not aware of the practical implication of the same............Thanx for u r suggestion

@ Gourav

Placed below is the context as given in our ICAI tax material. Hope this will clear ur doubts:

a. If Actual rent is lower than Annual Letting Value owing to vacancy, then Actual rent is the Gross Annual Value.

b. If Actual rent is lower than Annual Letting Value due to other reasons, then ALV-Annual Letting Value is the Gross Annual Value (GAV).

c. However, inspite of vacancy, if the actual rent is higher than the ALV, then Actual rent is GAV.

In addition to this, Unrealised Rent, if any, is to be deducted from Actual Rent as said above.

The annual value of the let out property shall be calculated as follows:

a) Fair Rent or Municpal rent whichever is higher - here it is Rs.14,400 (Because of insufficient information)

b) Step a) or Standard rent whichever is lower - Again here it is Rs.14,400 (Because of insufficient information)

c) Here we have to compare Rent received or receivable with Step b) - Here it will again be Rs.14,400 (Higher of the two)

LESS:

Loss due to vacancy - Rs.5000

therefore it is Rs.9400.

Originally posted by : praveen
	The annual value of the let out property shall be calculated as follows: a) Fair Rent or Municpal rent whichever is higher - here it is 14,400 (Because of insufficient information) b) Step a) or Standard rent whichever is lower - Again here it is 14,400 (Because of insufficient information) c) Here we have to compare Rent received or receivable with Step b) - Here it will again be 14,400 (Higher of the two) LESS: Loss due to vacancy - 5000 therefore it is 9400.

wch section says that loss due to vacancy shud be reduced....js tell the section number wch clearly says that it must be sutracted after comparison

Originally posted by : Prakash Prajapat
	step 1 fair rent =1200*12=14400 {fair rent or munciple value which ever is higher but subject to maximum S.R.} step 2 rent receive or receivable befor loss due to vacanceis = 12000 Step 3 1st or 2nd which is higher= 14400 STep 4 loss due to vacances 1000*5=5000 step 5 STEp3-STEp4(14400-5000=9400)(GAV) gav less municiple tax paid by owener=NAV

wch section explains step 5...jus give section number

Originally posted by : Prakash Prajapat
	step 1 fair rent =1200*12=14400 {fair rent or munciple value which ever is higher but subject to maximum S.R.} step 2 rent receive or receivable befor loss due to vacanceis = 12000 Step 3 1st or 2nd which is higher= 14400 STep 4 loss due to vacances 1000*5=5000 step 5 STEp3-STEp4(14400-5000=9400)(GAV) gav less municiple tax paid by owener=NAV

wch section explains step 5...jus give section number

@ gaurav kapoor

I think in Ahuja sirs book what i had read that he takes actul rent i.e. excluding the vacancy periode thats why he does nt deduct it further whereas in  singhanis book they take actual rent before adjusting loss due to vacancy thats y they deduct it in Step 5................

Originally posted by : Pooja Singh
	@ gaurav kapoor I think in Ahuja sirs book what i had read that he takes actul rent i.e. excluding the vacancy periode thats why he does nt deduct it further whereas in  singhanis book they take actual rent before adjusting loss due to vacancy thats y they deduct it in Step 5................

u r apsolutly correct pooja...nw we have two types of treatments ....

i think we all shud do wat section says abt his rather than authors....

as per sec 23, girish ahuja sir's treatment is correct because it is nt mentioned anywhere in the act that vacancy benefit shud be reduced....so thats i think we shud follow wat section says....wat do u say ?

ya Im studying at Mk Gupta and he has also told us the same thing there were no such deductions

Originally posted by : Gourav Kapoor
	Originally posted by : Pooja Singh @ gaurav kapoor I think in Ahuja sirs book what i had read that he takes actul rent i.e. excluding the vacancy periode thats why he does nt deduct it further whereas in  singhanis book they take actual rent before adjusting loss due to vacancy thats y they deduct it in Step 5................ u r apsolutly correct pooja...nw we have two types of treatments .... i think we all shud do wat section says abt his rather than authors.... as per sec 23, girish ahuja sir's treatment is correct because it is nt mentioned anywhere in the act that vacancy benefit shud be reduced....so thats i think we shud follow wat section says....wat do u say ?

Yet not seen BARE ACT thats y  cant say ki usme kya likha hai but my teacher in PCC told me that ki singhanis method is based on act......................

Originally posted by : Gourav Kapoor
	Originally posted by : Prakash Prajapat step 1 fair rent =1200*12=14400 {fair rent or munciple value which ever is higher but subject to maximum S.R.} step 2 rent receive or receivable befor loss due to vacanceis = 12000 Step 3 1st or 2nd which is higher= 14400 STep 4 loss due to vacances 1000*5=5000 step 5 STEp3-STEp4(14400-5000=9400)(GAV) gav less municiple tax paid by owener=NAV   wch section explains step 5...jus give section number

https://www.incometaxindia.gov.in/Archive/House_Property.pdf

please read the page 13 in this link. It is more over logic if you are not able to receive rent for the full year then even the fair value has to be reduce .

agree with the solution given by Pooja Singh and Prakash Prajapat...!! That's what i also read fr my academics....