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House Property

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This query is : Resolved

Meeta (Querist)
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21 September 2010 A person claimed House Tax paid say of Rs. 5,00,000/- while computing income from House property for AY 2007-08.

Now in AY 2010-11, he got the refund of Rs. 4,00,000/- alongwith interest of Rs. 55,000/-.He also has rental income in AY 10-11. So please suggest the tax treatment of above said refund. I think, there are two options :
- Consider Rs. 4,00,000+55,000/- as Income from Other sources

- Consider interest on refund as Income from Other sources and Rs. 4,00,000/- added to the rental income and claim 30% deduction on the same.

Which one is correct ? Have anything mentioned in the Act or Rules or Circulars or Notification regarding this?

Please suggest the correct treatment

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 September 2010 Both are wrong.
Principal portion of income tax refund (Rs. 4,00,000/-)is tax free.
Interest on income tax refund viz., Rs.55,000/- is taxable and hence offered under the head "income from other sources".

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