TAXaTION law-I

Topic:- Income from house property exempt from tax under

income tax act,1961

Submitted to:- Mr. Mani Pratap singh

Submitted by:-
Prabhakar Kumar
Course:- BALLB(Hons.)
Semester:- 8th
Roll:- CUSB1613125036
 Introduction

Section 4 of the Act provides for charge of income tax, income tax is
chargeable only when the central Act, which is usually the Finance Act,
enacts that income tax shall be charged for any assessment year at
the rate or rates specified therein. It is also a noticeable point that any
amount of money that is received by an individual is not chargeable to
tax; rather it is Section 14 of the Act, which provides specifically about
the five heads of income on which tax can be imposed under the
Income tax Act. An income has to fall under one of following heads
provided under the section: (i) salaries (ii) income from house property
(iii) profits and gains of business or profession (iv) capital gains and (v)
income from other sources. Sections 22 to 27 of the Act provide for
taxation of income from house property.
 SECTION 22, INCOME TAX ACT,1961

Section 22 makes provision for taxation of ‘annual value’ of a property

owned by the assessee, consisting of any buildings or lands
appurtenant thereto, under the head “Income from House Property. It is
noticeable point that the tax which is imposed under this provision is
actually a tax on the ‘annual value’ of house property and is not any
tax on that property itself.
Conditions necessary for taxing income from house property:-

The property should consist of any building or land appurtenant

thereto.
The assessee should be the owner of the property.
The property should not be used by the owner for the purpose of any
business or profession carried on by him, the
profits of which are chargeable to tax
Property consisting of any buildings or land appurtenant
thereto.
House property means buildings or land appurtenant thereto, and
the income from such house properly is chargeable under the head
income from house property The word 'building' has not been
defined by the Act. On the basis of judicial decisions, however, the
term building is wide enough to include residential houses,
warehouses, auditoriums for enfertainment programmes, cinema
halls, buildings let out for office use, stadium, open air theatre,
dance hall, music halls and lecture halls. Temporary hutments on
vacant land are not included in buildings and any income from such
hutments is taxable under the head income from other sources.
Land appurtenant to building include compound, play ground,
kitchen-garden, court yard etc. Land which is not appurtenant to
any building does not become house property for the purposes of
 Assessee should be the owner of the property

Section 22 makes the income from property taxable, instead of a

person’s interest in that property. A property cannot simultaneously
be owned by two persons, each one having independent and
exclusive right over it. Hence, for the purpose of Section 22, the
owner must be that person who can exercise the rights of the owner,
not on the behalf of the owner but in his own right.

The house property should not used for purposes of assessee's

business or profession

If the property or part thereof is used for assessee's business or

profession, the income from which is chargeable to tax, then the
annual value of such property or portion will not be taxed under
Section 22 i.e. income from house property.
 Income from house property exempt from tax.

• Income house property which is totally exempt.

Buildings situated in the immediate vicinity of agricultural land and which is

occupied by the cultivator as a dwelling house or as a store house. It is treated as
agriculture income and is fully exempt.
Any one palace in the occupation of a Ruler
House properties belonging to a local authority, scientific research association,
University or other recognised educational institution, hospital, or Games or
Sports Association and Registered Trade Union.
House property held by a trust established wholly 'for charitable purposes.
Property belonging to an authority constituted under any law for the purpose of
marketing of commodities and used for letting of godowns or warehouse for
storage of commodities.
House property owned by an assessee and used for his own business or
professional purposes.
 •Income from house property which is partially exempt

Building belonging to a co-operative society and income derived by it from

letting of godowns or warehouses for storage of commodities.
Building belonging to a co-operative society, where the gross total income of
the society does not exceed Rs. 20,000 and the society is not a housing society
or an urban consumers society or a society carrying on transport business or a
society engaged in manufacturing operations with the aid of power.
CONCLUSION

Section 22 of the Income Tax Act, therefore, makes provision for taxation of
‘annual value’ of a property owned by the assessee, consisting of any buildings
or lands appurtenant thereto, under the head “Income from House Property”.
The tax which is imposed under this provision is actually a tax on the ‘annual
value’ of house property and is not any tax on that property itself. However, as
discussed already, it is quite clear that the term “property” under sections 22 to
27 of the Act has not been employed in its ordinary or general sense or context.
It is very much restricted to the type delineated by the language of the
provision, i.e, buildings or lands appurtenant thereto. But there are some
situation of property which are exempted from the tax. As it is mention above
that these property is categorised in two part one who is totally exempted from
the tax and another is partially exempted. So we can say that the property is
exempted for the tax due to their working performance and their liability.