RENT

Treatment of unrealized and arrears rent under Income under the head Income from House property Unrealized Rent u/s 25AA where the assessee cannot realize rent from a property let to a tenant and subsequently the assessee has realized any amount in respect of such rent, the amount so realized shall be deemed to be income chargeable under the head “Income from house property” and accordingly charged to income tax as the income of that previous year in which such rent is realized whether or not the assessee is the owner of that property in that previous year. Section 25AA provides that deduction of 30% of amount recovered shall not be allowed nor does it state that it will not be allowed. Hence, unless specifically provided, it should not be allowed. Arrears of Rent received u/s 25B Where the assessee 1. Is the owner of any property consisting of any buildings or lands appurtenant thereto which has been let to a tenant and 2. Has received any amount, by way of arrears of rent from such property, not charged to income tax for any previous year. The amount so received, after deducting a sum equal to 30% of such amount, shall be deemed to be the income chargeable under the head income from house property. Further it will be charged to income tax as the income of that previous year in which such rent is received, whether the assessee is the owner of that property in that year or not.