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Unit 8: Income from House Property

Annual value of the house 40,000 Notes
(No benefit shall be given for self occupied period as the house did not remain vacant during the
previous year)

Notes If fair rent is not gives, then assume actual rent as fair rent.

(c) Self-occupied House Remaining Vacant : If the assessee has reserved only one of the
houses (owned by him) for his residence or he is the owner of only one house which is
meant for his own residence but could not be occupied by him for residential purposes in
the previous year owing to the fact that he had to live at some other place in a house not
belonging to him, then he can claim non-occupation or vacancy allowance during the
previous year for the period during which house remained vacant. The reason for his
living at a different place might be for business or professional purposes or for a salaried
employee due to transfer etc. The annual value of the house, which remained vacant in
these circumstances, shall be nil.

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Caution The above mentioned concession will be granted to the assessee only if he has
neither let out the said house nor has derived any benefit from it during the period for
which it remained vacant. No deduction, except interest on borrowed capital upto a
maximum of ` 30,000 are allowed in computing income from such a house. This amount of
` 30,000 has been increased by Finance Act, 2001 w.e.f. AY 2002–03 to ` 1,50,000 where
property is acquired or constructed with capital borrowed on or after the 1st day of April
1999 and such acquisition or construction is completed within three years from the end of
the financial year in which capital was borrowed.

Self Assessment

Fill in the blanks:
24. The annual value of one self-occupied house property, which has not been actually let out
at any time during the previous year, is taken as………………………….
25. From the annual value, only the interest on borrowed capital is allowed as a deduction
under………………………
26. When borrowal of money or acquisition of the property is after 31.3.1999 - deduction is
………………. applicable to A.Y 2002–03 and onwards.
27. However, if the borrowal is for repairs, renewals or reconstruction, the deduction is
restricted to……………………..

8.7 Some Special Provisions

Some of the special provisions relating to Income generated from house property are as under:

Taxability of Unrealized Rent Recovered Later (Section 25A)
Where any rent cannot be realized, and subsequently if such amount is realized, such an amount
will be deemed to be the income from house property of that year in which it is received. We
have seen earlier that the basic requirement for assessment of this income is the ownership of
the property. However, in the cases where unrealized rent is subsequently realized, it is not

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