Please Wait ..

Sign-in to your account


Username:
Password:

Remember Me

Forgot your password?

Sign-up now



Join CAclubindia.com and Share your Knowledge. Registered members get a chance to interact at Forum, Ask Query, Comment etc.


Discussion > Income Tax > Tax queries >

Income from House Property - Deemed to be Let Out

    Post New Topic
Pages : 1 2





Manager - FP&A


[ Scorecard : 26]
Posted On 22 June 2011 at 18:02 Report Abuse

Hi All,


Request you all to please help me out on this case.

A residential house (situated in City A) is co-owned by father and son. Father is residing in City B and son is residing in City A. 

Till last year, this house was let out and the actual rent received (say Rs 10,000) was divided between father & son (i.e. Rs 5,000 each) and was declared respectively in their Income Tax return.

Now, from current year this house is lying vacant. Son is for some reason residing in other house in City A for which he is paying rent and claiming the same under HRA deduction.

Request you all to please help with the tax treatment of the above case (assume that entire interest benefit of loan is availed by Son as the entire loan EMI is paid by him)

The tax treatment that I presume is as under:

For the current year, if the co-owned house is treated as 'DLOP - Deemed to be let out property', the son will be showing Rs 5,000 (i.e. his share of deemed rent) as deemed rent in his Income Tax Return..... But, will father be exempted from deemed rent as he is residing in City B (in a property not owned by him) where he is running his business and the property is situated in City A

Please help.

 


Online classes for CA CS CMA



Shruthi
PCC Student


[ Scorecard : 111]
Posted On 22 June 2011 at 19:59

You said From the current year the house been lying vacant and so, this wont come under Deemed Let out property i guess.

This is called as Let Out Property kept vacant for the whole year.

So, the tax treatment must be

i)Annual Value -                 Nil

ii)(-) Muni.Tax  -                   xxx

iii)NAV        -                       i) - ii)

iv)Interest   -                        xxx

v)HP Income -                  iii) - iv)

 

So you dont've to worry about 5000 or 10000 and also if its to be shown as deemed rental income in father's or son's respectively. Just the Annual value is Nil. 

You will be getting Loss from House Property as you are going to show Interest paid as Deduction in the hands of Son, since u'r claiming entire deduction in his Return alone.

 





C.A. Jignesh N. Mehta
C.A.


[ Scorecard : 982]
Posted On 22 June 2011 at 20:54

Originally posted by : Shruthi

You said From the current year the house been lying vacant and so, this wont come under Deemed Let out property i guess.

This is called as Let Out Property kept vacant for the whole year.

So, the tax treatment must be

i)Annual Value -                 Nil

ii)(-) Muni.Tax  -                   xxx

iii)NAV        -                       i) - ii)

iv)Interest   -                        xxx

v)HP Income -                  iii) - iv)

 

So you dont've to worry about 5000 or 10000 and also if its to be shown as deemed rental income in father's or son's respectively. Just the Annual value is Nil. 

You will be getting Loss from House Property as you are going to show Interest paid as Deduction in the hands of Son, since u'r claiming entire deduction in his Return alone.

 

Sorry friend i have a different view....

Since the property was vacant for the full year, it will be treated as DLOP in hands of both father and son..

Father cannot get exemption , as the treatement has to be same in hands of both father and son.

So father has to pay tax on property not let out.

Further father can claim the rent paid by him in CITY B from his business income.




Member (Account Deleted)
Tax faculty & Tax consultant


[ Scorecard : 1123]
Posted On 22 June 2011 at 21:05

Mr. Harshit

Lovely name. 

If you read S 23(4) it says that a property shall be treated as DLOP only when the assessee owns more than 1 residential house.

In the present case neither father nor son have two house. They have only one house. Both are residing in rented property. 

Therefore S 23(4) is not applicable.

However S 23(2)/(3) becomes applicable. In your case property is called Self occupied property for residence. Or you can say property is kept vacant for self residence. (I hope Shruti understand )

Now the calculation

Annual value nil.

Interest on borrowed capital can be claimed as deduction to a maximum of Rs. 1,50,000. Assuming all the relevant conditions are satisfied.



Total thanks : 1 times



M.com,CS,CAFinal Tushar Sampat
M.com CS,CA Final


[ Scorecard : 65896]
Posted On 22 June 2011 at 22:29

Originally posted by : kaushal (taxbykk)

Mr. Harshit

Lovely name. 

If you read S 23(4) it says that a property shall be treated as DLOP only when the assessee owns more than 1 residential house.

In the present case neither father nor son have two house. They have only one house. Both are residing in rented property. 

Therefore S 23(4) is not applicable.

However S 23(2)/(3) becomes applicable. In your case property is called Self occupied property for residence. Or you can say property is kept vacant for self residence. (I hope Shruti understand )

Now the calculation

Annual value nil.

Interest on borrowed capital can be claimed as deduction to a maximum of Rs. 1,50,000. Assuming all the relevant conditions are satisfied.

AGREED.



Total thanks : 1 times



Harshit Kayan
Manager - FP&A


[ Scorecard : 26]
Posted On 22 June 2011 at 22:53

Originally posted by : kaushal (taxbykk)

Mr. Harshit

Lovely name. 

If you read S 23(4) it says that a property shall be treated as DLOP only when the assessee owns more than 1 residential house.

In the present case neither father nor son have two house. They have only one house. Both are residing in rented property. 

Therefore S 23(4) is not applicable.

However S 23(2)/(3) becomes applicable. In your case property is called Self occupied property for residence. Or you can say property is kept vacant for self residence. (I hope Shruti understand )

Now the calculation

Annual value nil.

Interest on borrowed capital can be claimed as deduction to a maximum of Rs. 1,50,000. Assuming all the relevant conditions are satisfied.

Hi Mr. Kaushal,

Many Thanks...!!

Query:

Won't this result in Son getting the dual benefit of HRA deduction as well as no deemed rental income..?




CHAITANYA
C.A.; C.S.


[ Scorecard : 90]
Posted On 23 June 2011 at 15:24

Originally posted by : Harshit Kayan
 




Query:

Won't this result in Son getting the dual benefit of HRA deduction as well as no deemed rental income..?

Let son or father claim it as SOP not a problem:

In suchcases; where assessee for his business or profession leaving in other city Annual VaLUE IS NIl u/s 23(2)(a)

 however, HRA is paid for actual rent expenses incurred by employee (immaterial that employee having his own house or not)

therefore in this case whoever be claim property as SOP there is no problem and also not dual benrfit by anyone.

 

 

 




Navneet
C A Student


[ Scorecard : 32]
Posted On 23 June 2011 at 15:52

I have a different view regarding this. Here in the said situation the assessees have chosen their resp houses as residence. since the other property is vacant. it can give rise to a situation of 23(2) that is UN-OCCUPIED PROPERTY , it cannot give rise to a situation of DEEMED TO BE LET OUT because deemed to be let out arises only if the assesse is the OWNER OF MORE THAN ONE HOUSE.... here he is the owner of just one house. Therefore for income tax purpose (calculation of self and unoccupied property is in the same manner)

Annual Value = Nil

Municipal Tax = Nil

Nav                  = Nil

No ded u/s 24

Interest Subject to 1.5lcs ( Moreover only 50% eligible since co ownership even if he pays the whole interest still only 50 percent eligible)




Member (Account Deleted)
Tax faculty & Tax consultant


[ Scorecard : 1123]
Posted On 23 June 2011 at 16:37

Let there be dual benefit. But income tax act do not stop this dual benefit. avail the dual benefit. no problem




Navneet
C A Student


[ Scorecard : 32]
Posted On 24 June 2011 at 18:21

I did a bit of a research and what i could find was that such property will be treated as let out during the year but VACANT.... in this regard the annual value calculation will be subject to fair rent, municipal valation etc.... and accordingly the value is arrived at.  



There are 12 Replies to this message





Related Files








Related Threads


Post your reply for Income from House Property - Deemed to be Let Out



Your are not logged in . Please login to post replies

Click here to login


Not a member yet ?? Click here to signup

Message







    

  • Use thank button to convey your appreciation.
  • Maintain professionalism while posting and replying to topics.
  • Try to add value with your each post.




Forum Home | Forum Portal | Member Control Center | Who is Where | Popular Threads | Today's Topic | Recent Posts | Today's Posts | Post New Topic | Thread With Files | Top Threads This Month | Forum Stats | Unreplied Threads

back to the top