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

Mr. Kapoor lets out a house whose reasonably expected annual rent is Rs. 4,80,000. The house was vacant for 3 months of the tax year, and owing to this vacancy the rent received for the year was Rs. 3,00,000 (Rs. 33,333 for 9 months, taken as Rs. 3,00,000 in total). Municipal taxes of Rs. 20,000 were levied and actually paid by him during the year. What is the net annual value?

The net annual value is Rs. 2,80,000. Since the let house was vacant and the rent receivable fell below the expected rent, the annual value is the actual Rs. 3,00,000. Municipal taxes of Rs. 20,000 actually paid are then deducted, leaving Rs. 2,80,000.

  1. ARs. 2,80,000Correct
  2. BRs. 4,60,000
  3. CRs. 4,80,000
  4. DRs. 3,00,000

Explanation

Because of the vacancy, actual rent receivable (Rs. 3,00,000) is less than expected rent (Rs. 4,80,000), so the annual value is Rs. 3,00,000. Deducting municipal taxes paid of Rs. 20,000 gives Rs. 2,80,000. Rs. 3,00,000 omits the municipal tax deduction.

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