Page 240 - DCOM301_INCOME_TAX_LAWS_I

Unit 8: Income from House Property

However, if the borrowal is for repairs, renewals or reconstruction, the deduction is restricted to Notes
` 30,000. If the borrowal is for construction/acquisition, higher deduction as noted above is
available.
If a person owns more than one house property, using all of them for self-occupation, he is
entitled to exercise an option in terms of which, the annual value of one house property as
specified by him will be taken at Nil. The other self occupied house property/is will be deemed
to be let out and their annual value will be determined on notional basis as if they had been
let out.

Annual Value of One House away from Work Place [Section 23(2) (b)]

A person may own a house property, for example, in Bangalore, which he normally uses for his
residence. He is transferred to Chennai, where he does not own any house property and stays in
a rental accommodation. In such a case, the house property in Bangalore cannot be used for
self-occupation and notional income, therefore, would normally have been chargeable although
he derives no benefit from the property. To save the tax payer from hardship in such situations,
it has been specifically provided that the annual value of such a property would be taken to be
nil subjects to the following conditions:
The assessee must be the owner of only one house property.

He is not able to occupy the house property because of his employment, business etc.,
away from the place where the property is situated.
The property should not have been actually let or any benefit is derived therefrom.

He has to reside at the place of employment in a building not belonging to him.
Annual Value of a House Property which is Partly Self-occupied and Partly Let Out

If a house property consists of two or more independent residential units, one of which is
self-occupied and the other units are let out, the income from the different units is to be calculated
separately. The income from the unit which is self-occupied for residential purposes is to be
calculated as per the provisions of Section 23(2)(a) i.e. the annual value will be taken as nil and
only interest on borrowed capital will be deductible upto the maximum limit of ` 1,50,000 or
` 30,000, as the case may be. The income from the let out unit(s) will be calculated in the same
manner as the income from any let out house property.

If a house property is self-occupied for a part of the year and let out for the remaining part of the
year, the benefit of Section23(2) (a) is not available and the income from the property will be
calculated as if it is let out.

Example:

Mr. Ravi owns a house which uses for residential purposes throughout the previous year
2012–13.
Municipal Value 2,40,000

Fair Rent 3,00,000
Compute income from house property assuming following expenditures are
incurred by him:

Municipal taxes paid 15,000
Repairs 12,000

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