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CS Executive · Tax Laws and Practice · Income under the Head House Property

Mr. Rao owns a building. He occupies one portion for running his own consultancy, the profits of which are taxed under the Income-tax Act, 2025. Which statement is correct for that portion?

The house property charge does not apply to the portion Mr. Rao occupies for his own profession whose profits are taxable. Section 20(2) of the Income-tax Act, 2025 excludes such portions from annual value taxation, regardless of whether the profession earns a profit or loss.

  1. AIts annual value is chargeable under Income from house property at 30% deduction
  2. BThe provisions charging annual value under house property do not apply to the portion he occupies for his professionCorrect
  3. CIts annual value is taxed under Income from other sources
  4. DIt is taxed as house property only if the profession shows a loss

Explanation

Section 20(2) states that the charge on annual value does not apply to portions of the property which the assessee occupies for his business or profession, the profits of which are chargeable to tax. So the portion is outside the house property head. The loss condition is not in the section.

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