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Income Tax Laws – I

Notes necessary that the assessee continues to be the owner of the property in the year of receipt also
Assessment of arrears of rent received (Section 25B).
When the owner of a property receives arrears of rent from such a property, the same shall be
deemed to be the income from house property in the year of receipt. 30% of the receipt shall be
allowed as deduction towards repairs, collection charges etc. No other deduction will be allowed.
As in the case of unrealized rent, the assessee need not be the owner of the property in the year
of receipt.

House Property Owned by Co-owners (Section 26)

If a house property is owned by two or more persons, then such persons are known as co-owners.
Co-owners are not taxable as an association of persons.
When the share of each co-owner is definite and ascertainable, it has been provided that each of
the owners will be assessed individually in respect of share of income from the property. In
other words, income from the property will be determined and allocated to each co-owner
according to his share. When each of the co-owners of a property uses it for his residence, each
of them will also get the concessional treatment in respect of one self-occupied property.

Loss from House Property

If the aggregate amount of permissible deductions exceeds the annual value of the house property,
there will be a loss from that property. So far as income from a self-occupied property is
concerned, and in respect of a property away from the workplace, the annual value is taken at nil
and no other deductions are allowed except for interest on borrowed capital upto a maximum of
` 30,000 or ` 1,50,000. In such cases, there may be a loss up to a maximum of ` 30,000 or ` 1,50,000,
as the case may be. However, in respect of a let out house property, there are no restrictions on
deductions and therefore, there can be loss of any amount under this head.
The loss from one house property can be set off against the income from another house property.
The remaining loss, if any, can be set off against incomes under any other head like salary. In
case the loss does not get wiped out completely, the balance will be carried forward to the next
assessment year to be set off against the income from house property of that year. However,
such carry forward is restricted to eight assessment years only.
Chart Showing Computation of Taxable Income from House Property
Chart 8.1: Computation of Taxable Income from House Property

Gross Annual Value of the house XXX
Less: Local Taxes paid by the owner during the previous year XXX

Annual Value XXX
Less: Deduction under Section 24: For house let out or deemed to be let out:
(i) Repairs and Collection Charges (30% of Annual Value) XXX
(ii) (a) Interest on loan, taken for purchase, construction of repair of
the house, relating to previous year XXX
(b) Interest on loan for the period prior to the previous year in
which the house is completed is also allowable in five equal
annual instalments XXX XXX
Taxable Income from House Property XXX

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