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urgent tax query

CA Paras jain (Audit Senior Assistant) (1544 Points)

13 January 2010

can anyone solve my doubt from house property!!

Q- Fair rental value is rs.1200 and actual rent is rs.1000. the house was vacant for 5 months.

calculate amount taxable..??

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28 Replies

CA Paras jain (Audit Senior Assistant) (1544 Points)
Replied 13 January 2010

n ya according to me it can be like this..:-

FRV = rs 14400

actual rent= rs 12000

whichever is higher => rs.14400

and as house was vacant for 5 mothns then actual rent for 5 months wud be rs.5000

hence amt taxable is rs.14400 - 5000 = rs.9400

correct me if m wrong..plzzzzz

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CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 January 2010

thats correct

CA Paras jain (Audit Senior Assistant) (1544 Points)
Replied 13 January 2010

but smone said the answer is rs.14400

so which one is correct???

CA RAJENDRA PANDEY (ACA B. Com AMFI NCFM NISM) (327 Points)
Replied 13 January 2010

rs. 14400 is wrong

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 January 2010

Hi paras, the simple logic applies overhere is that property has remained vacant for 5 months.., so that means u have not recieved rent for those months...

Now, buddy, how can u charge such income which u have not recieved at all????

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CA Paras jain (Audit Senior Assistant) (1544 Points)
Replied 13 January 2010

no a ctualy some teachers solved it by applying sec23(1)(a)

they take direclty FRV = rs.14400

actual rent = rs.12000 - rs.5000 = rs.7000

hence amt higher = rs.14400

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 January 2010

Thats completely INCORRECT..... its void ab initio....

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 January 2010

Such amount is considered as LOSS DUE TO VACANCY.... which is to be deducted from the amount higher of FRV/MRV/SRV or AR.......

The solution u said, is completely incorrect,, it should be dedcuted later

CA Paras jain (Audit Senior Assistant) (1544 Points)
Replied 13 January 2010

that means i ws correct wd my answr of rs.9400

thnx Dhiraj sir for clearing my doubt..

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 13 January 2010

Yup, ur 9400 was correct....

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CA.Amit Mehta (Professional) (254 Points)
Replied 13 January 2010

no buddy thats not correct one is this

a) frv 14400

b) actual rent receivable = 7000

c) b + vacant = 7000+5000=12000

so, if a > c than ans is a i.e. 14400

& if a < c than ans is b i.e. 7000

therefor in this case 14400

kaushik (service) (125 Points)
Replied 13 January 2010

Step 1

Municipal valuation(a)

Fair rent (b)

Standard rent (c )

Higher of (a) and (b) subject to maximum (c)

Step-2

The reasonable expected rent has to be compared with actual rent received or receivable i.e (d) and if (d) is higher than reasonable expected rent under step 1 , then (d) becomes gross annual value under step 2 and in that case step 3 is not applicable

Step-3

If (d ) is lower than reasonable expected rent under step 1 and one has to find the reasons as to why (d) is lower than reasonable expected rent like (d) is lower than reasonable expected rent only because vacancy

And in your case