Skip to content

CMA Intermediate · Direct and Indirect Taxation · Income from House Property

Mr. Arjun Rao owns a building. He uses one floor to run his own consultancy practice, and the profits of that practice are chargeable to income-tax. How is that floor treated under the head "Income from house property"?

The floor is not chargeable under Income from house property. The Act excludes any portion of a property that the owner occupies for his own business or profession when the profits of that business or profession are taxable. Its income is covered by the business or profession computation instead.

  1. AIt is taxed on its annual value, with a 30% deduction
  2. BIt is not chargeable under this head, because he occupies it for his own business or professionCorrect
  3. CIt is taxed only if the consultancy makes a loss
  4. DIt is taxed on its annual value, with interest deduction capped at Rs. 30,000

Explanation

Section 20(2) says the charge under section 20(1) does not apply to portions of a property that the assessee occupies for his business or profession, where the profits of that business or profession are chargeable to tax. The floor therefore falls outside this head. The other options wrongly apply the house property computation to it.

Did you get it right without looking?

One question tells you little. A timed set on Income from House Property shows your real accuracy, how long you take and where you lose marks.

Practise Income from House PropertyFree diagnostic mock

More Income from House Property questions