urgent tax query

n ya according to me it can be like this..:-

FRV = rs 14400

actual rent= rs 12000

whichever is higher => rs.14400

and as house was vacant for 5 mothns then actual rent for 5 months wud be rs.5000

hence amt taxable is rs.14400 - 5000 = rs.9400

correct me if m wrong..plzzzzz

thats correct

but smone said the answer is rs.14400

so which one is correct???

rs. 14400 is wrong

Hi paras, the simple logic applies overhere is that property has remained vacant for 5 months.., so that means u have not recieved rent for those months...

Now, buddy, how can u charge such income which u have not recieved at all????

no a ctualy some teachers solved it by applying sec23(1)(a)

 they take direclty FRV = rs.14400

actual rent = rs.12000 - rs.5000 = rs.7000

hence amt higher = rs.14400

Thats completely INCORRECT..... its void ab initio....

Such amount is considered as LOSS DUE TO VACANCY.... which is to be deducted from the amount higher of FRV/MRV/SRV or AR.......

The solution u said, is completely incorrect,, it should be dedcuted later

that means i ws correct wd my answr of rs.9400

thnx Dhiraj sir for clearing my doubt..

Yup, ur 9400 was correct....

no buddy thats not correct one is this

a) frv 14400

b) actual rent receivable = 7000

c) b + vacant = 7000+5000=12000

so, if a > c than ans is a i.e. 14400

& if a < c than ans is b i.e. 7000

therefor in this case 14400

Step 1

Municipal valuation(a)

Fair rent (b)

Standard rent (c )

Higher of (a) and (b) subject to maximum (c)

Step-2

The reasonable expected rent has to be compared with actual rent received or receivable i.e (d)  and if (d) is higher than reasonable expected rent under step 1 , then (d) becomes gross annual value under step 2 and in that case step 3 is not applicable

Step-3

If (d ) is lower than reasonable expected rent under step 1 and one has to find the reasons as to why (d) is lower than reasonable expected rent  like (d) is lower than reasonable  expected rent only because vacancy

And in your case

Step -1

FRV = Rs 14400

Municipal value nil

Higher is Rs 14400/-

Step-2

Actual rent receivable = Rs 12000 (d1)

Unrealized rent nil (d2)

And loss of rent due to vacancy is 5000 (d3)

Now d = (d1)-((d2)-(d3) ) and (d) i.e 7000 and it is not higher than step1

Step-3

Rs 7000 and  it is assumed that (d) is lower only because of vacancy and (d) is taken as gross annual value i.e Rs 7000/-

 And in this case gross annual value is Rs 7000

www.incometaxindia.gov.in

HOW IS ANNUAL VALUE OF PROPERTY DETERMINED FOR THE PURPOSES OF TAXATION OF PROPERTY INCOME?

ALV = [Rent actually received or Fair Market Rent, whichever is higher] - [Vacancy Allowance related to the vacant period] - [Rent not realisable].

Nywz, i think i got the point.... cleared by SAMIR...

It should be 14400 only... Sorry Paras...