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House property

karan jit singh (Consultant) (1299 Points)

24 December 2011

guys I wanna know that

If the property used for the purpose of business ,then in which head it is chargeable?

n

what does it means "annual value of house property will be charged under head income from house property when it is held by assessee as stock in trade of a business"/.

pls reply as soon as possible ......

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12 Replies

ashish gupta ( student) (1922 Points)
Replied 24 December 2011

purpose needs to be defined. If the assessee carries his business from that property then its value is not taxable

Stock in trade means like for a property dealer the properties will become Stock and the valuw will be chargeable under income from house property

karan jit singh (Consultant) (1299 Points)
Replied 24 December 2011

how it is possible.....
if a person carries his business from that property then its annual value is chargeable .but again i dont know under which head its chargeable?

Naresh Patel (C.A. Final) (144 Points)
Replied 24 December 2011

Give us your query with example...

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 24 December 2011

Karan ji,

Property used for Business: If the property is used by the owner thereof for any business or professio carried on by him, and the profit of such business are chargeable to tax (PGBP), then incoe from such property shall not be chargeaable to tax under the head income from house property. Provided, use of business must be by owner of the property.

Because income generated by using this house property is already chargeable to tax under the head PGBP.

Property held as a stock in trade: If the property is held by the assessee as a stock in trade, or is engaged in the business of letting out of property on rent, or the assessee is a company incorporated for the purpose of owing house property, the income falls under the head ‘Income from House Property’ because it is the specific head for charge ‘Income from House Property.’

Members please correct me if I'm wrong.

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CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 25 December 2011

It comes under the income from house property. Annual value means rent payable or the Annual tax Payable.

Sheena Maheshwari (ARTICLESHIP) (240 Points)
Replied 25 December 2011

ketan is right.

if property is used for own business income is not chrged under house property and this includes using it as guesthouse for your employees.however, if the property is let out to someone and that person uses it for his business or otherwise then the rental income is chargeable under house property.

"annual value of house property will be charged under head income from house property when it is held by assessee as stock in trade of a business"/.

this means if suppose a builder holds house property as stock in trade then their annual value is not charged under PGBP instead it is charged under house property

1 Like

CS RAJESH C.CHOUDHARY (ASSISTANT MANAGER) (14607 Points)
Replied 26 December 2011

Chargeability (Section 22):The annual value of a property, consisting of any buildingsor lands appurtenant thereto, of which the assessee is theowner, is chargeable to tax under the head ‘Income from houseproperty’ after claiming deductions under section 24 providedsuch portion of the property is not used by the assessee forthe purpose of business or profession the income from whichis chargeable to Income tax.Essential Conditions for charging income under this headi) The property must consist of buildings and lands.ii) The assessee must be the owneriii) The property must not be used for the purpose of businessor profession.

so, in your case if u r the owner of property and using for business purpose it is not chrgable for income tax

karan jit singh (Consultant) (1299 Points)
Replied 02 January 2012

k.so guys can i say that if a property is used by the owner thereof for any business or profession carried on by him then it is chargeable under the head "other sources"?

karan jit singh (Consultant) (1299 Points)
Replied 02 January 2012

for eg

suppose I have a co named "kj" n I m d owner so the income from my house property used by my co. (kj) is chargeable under which head?

and

@ sheena: can you give me one more example of property held as stock in trade?

Sheena Maheshwari (ARTICLESHIP) (240 Points)
Replied 04 January 2012

stock in trade clause is mainly applicable to builders since it is usually them who hold house property for selling it i.e. for trading in it.

and one explanation : if house property is used for own business/profession then would not be income but allowed as an expense under pgbp to that extent

eg.if u have a profession say ca practice n u use half of ur house as office . municipal taxes paid for entire house 12000 n interest 16000

then allow 6000 municipal taxes and 8000 interest as expense under pgbp

Raj Chitroda (Accounts) (325 Points)
Replied 12 January 2012

Dears... Assesseee having ownership of 10 Shop and he received rent from letting out these shops.. Kindly let me know under which head of income he compute his income..wheter is business or House property income ?? kindly state the Section for the head.. Thanks in advance