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

Mr. Rohan Mehta owns a two-floor building in Pune. He occupies the ground floor for running his own consultancy, whose profits are taxed under business or profession, and lets out the first floor to a tenant. Under the Income-tax Act, 2025, how is the ground floor treated for the head Income from house property?

The ground floor's annual value is excluded from Income from house property, because the owner occupies it for his own profession whose profits are taxed under business or profession. Only the let-out first floor is charged under the house property head.

  1. AIts annual value is excluded from this head because he occupies it for his own professionCorrect
  2. BIts annual value is charged under this head along with the first floor
  3. CIt is charged under this head only if the consultancy makes a loss
  4. DIt is charged under this head at a nil value only

Explanation

Section 20(2) provides that section 20(1) does not apply to portions the assessee occupies for his business or profession, the profits of which are chargeable to tax. The ground floor is therefore outside the head, while the let-out first floor remains chargeable. The option claiming it is charged alongside ignores this carve-out.

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