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CA Intermediate · Taxation · Income from House Property

Ms. Kavita Rao owns a shop in Jaipur and uses it throughout the year for carrying on her own proprietary business. How is the shop's use treated for income-tax purposes in the tax year 2026-27?

The shop is not charged under income from house property. A property occupied by the owner for her own business, whose profits are taxed as business income, is outside that head, so no notional annual value is taxed, and related costs are claimed in computing business profits.

  1. ATaxed as income from house property on the shop's net annual value
  2. BTaxed under income from other sources at the fair rent
  3. CNot chargeable under income from house property, as the property is used by the owner for her own business, so no notional income arisesCorrect
  4. DTaxed as income from house property with only a standard deduction

Explanation

Income from house property covers buildings other than those occupied by the owner for her own business or profession, the profit of which is chargeable to tax as business income. No notional rent is taxed for the shop. Its expenses such as repairs and depreciation are dealt with in computing business profits. Taxing the shop's net annual value under house property is therefore wrong.

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