Page 249 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes 8.9 Keywords

Annual Value: It is the amount for which the property might be let out on a yearly basis.
Borrowed Capital: These are the funds borrowed from either individuals or institutions.

Building: It includes residential houses, bungalows, office buildings, warehouses, docks, factory
buildings, music halls, lecture halls, auditorium etc.
Composite Rent: When the total amount i.e. rent of the building along with the hire charges for
other assets such as furniture or service charges for certain services such as security, lift, etc. is
received by the owner of the building; such amount so received is defined as Composite Rent.
Deemed Owner: The persons who are not the legal owners of a house property but they are
treated as owners of that house property for the purpose of calculation of tax liability.
Fair Rental Value: It is the rent normally charged for similar house properties in the same
locality.
Municipal Property Tax: A tax levied against the owner of real or personal property.
Municipal Value of Property: The municipal authorities take into account several factors in
order to reach the municipal value. On this amount, the municipal taxes are charged.
Rent Control Act: Under the Rent Control Act, there is a standard rent fixed. It is expected that
an owner should not receive rent higher than specified in the Rent Control Act.
Standard Rent: It is the maximum rent which a person can legally recover from his tenant under
a Rent Control Act.

8.10 Review Questions

1. Distinguish between
(a) Gross Annual Value and Annual Value
(b) Deemed Owners and Actual Owners
(c) Standard Rent and Expected Rent
(d) Fair Rent and Annual Rent

2. Discuss the meaning of ‘Owner of House Property’ under Section 27 of the Income-tax Act,
1961.
3. Define the ‘annual value’ of house property. How is it computed?

4. In computing the income from house property what deductions are allowed from the net
annual value?
5. What is the basis of computation of income from House property? How would you arrive
at the net annual value of a house occupied by an assessee for his own residence?
6. How would you deal with the following while calculating the income under ‘Income
from house property’:
(a) Annual Charge
(b) Unrealised Rent
(c) Income from house property situated in a foreign country

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