Notional rent of property used in business added to PGBP or not

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This discussion explores whether the annual value of a property used for both residence and business purposes should be added to the Profits and Gains from Business or Profession (PGBP). It clarifies that if the owner uses the property for their business and the business income is taxable, the annual value is not taxed under the head 'Income from House Property'. The query also touches upon claiming deductions for interest expenses when a portion of the property is used for business.

Shambhavi Sabarish

Shambhavi Sabarish (Querist)

11 November 2023 Where an assessee uses a property for residence cum office purposes, should the annual value of property used in business be added to PGBP?

The ICAI material mentions that annual value of the following properties is added to PGBP:
1) Portions of property occupied by assessee for business or profession carried on by him.

Is the annual value of this property ( calculated in the same way as let out) called as notional rent? Is it to be added to PGBP? Considering the fact that we have not actually received anything, how can we add annual value ? Also, as per Sec 22 only profits from using the property is added to PGBP.

This particular line from the material is confusing me . Kindly help me interpret the meaning of this.

Thank you.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 November 2023 The annual value of a house property is not chargeable to tax under this head if following conditions are satisfied:

(a) The owner of the property utilizes the property for the purpose of carrying on his business or profession; and

(b) Income of such business or profession is chargeable to tax.

Shambhavi Sabarish

Shambhavi Sabarish (Querist)

02 December 2023 Thank you sir .

I have a follow up question:
If part of the building is used for residence and part for business(50%) , then for deduction under 24(b) will 50% of interest be charged under IFHP and remaining 50% be charged as expense under PGBP?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

02 December 2023 100% deduction can be claimed under 24(b).

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