CMA Intermediate · Direct and Indirect Taxation · Income from House Property
Mr. Suresh Nair sold his rented house in an earlier year. In the current tax year he receives Rs. 1,00,000 as arrears of rent for the period when he owned it, and he is no longer the owner. What amount is taxable as income from house property?
Rs. 70,000 is taxable. Arrears of rent received are taxed as house property income in the year of receipt, even if the assessee no longer owns the property. A 30% deduction of Rs. 30,000 is allowed on the Rs. 1,00,000 received.
- ARs. 1,00,000
- BRs. 70,000Correct
- CNil, because he no longer owns the property
- DRs. 30,000
Explanation
Arrears of rent are deemed income from house property in the year of receipt. This holds whether or not the assessee is still the owner. A deduction of 30% (Rs. 30,000) is allowed, so Rs. 70,000 is taxable. Treating it as nil ignores that ownership is irrelevant for such receipts.
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