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

Ramesh owns a two-storey building. He runs his own printing business from the ground floor, and the business profits are chargeable to tax. He has let the first floor to a tenant at Rs. 6,00,000 annual value. Which statement is correct under the Income-tax Act, 2025?

Only the first floor's annual value is charged under income from house property. The ground floor, occupied by the owner for his own business whose profits are taxable, is excluded by the section, while the let-out portion remains chargeable.

  1. AAnnual value of the whole building is taxed as house property
  2. BNeither floor is taxed under house property because the building is used for business
  3. COnly the ground floor is taxed as house property because it is self-occupied
  4. DAnnual value of the first floor only is taxed as house property; the ground floor portion is excludedCorrect

Explanation

Section 20(2) excludes the portions the assessee occupies for his business or profession, whose profits are chargeable to tax. The first floor is let out and is not occupied for the business, so its annual value is taxed as house property. Taxing the whole building ignores the exclusion.

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