TREATMENT OF CHANGE OF RENT DURING THE

YEARIn this situation, Annual rental value &

loss due to vacancy is calculated on the basis of average rental value calculated

as follows: Average rental value:

Rent received Let out monthsNEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

SALE / PURCHASE OF PROPERTY DURING THE YEAR

In this situation, ERV is calculated for ownership

months. ARV is also calculated for ownership months. If there is any vacancy then it shall be

adjusted before computing taxable GAV.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

CONCEPT OF COMPOSITE RENT

In this situation the composite rent is divided in two categories:

One: the rent of building which is considered for calculating ARV.

Two: the rent of facilities like electricity, food, cloth washing, guard, cable tv expenses etc which is considered for calculating Income from other source.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

If rent can not be disintegrated then total rent

shall be treated in the chapter of IFOS like e.g. paying guest accommodation, renting of hospital, cinema hall etc.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

The test to determine the above concept is that if building is capable

of being let out without attached furniture, machines & facilities then

the rent charged shall be disintegrated. If this is not the case, then the rent shall be treated like business receipts or Income from

other sources.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

Treatment of loss : As first step as section 70, House property loss is adjusted against house property

income. As second step as per section 71, House

property loss is adjusted against other incomes.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

If still House property loss cannot be adjusted than its carried forward for next 8 assessment years as per section 71B. In subsequent years it can be adjusted only against house property income.

NEERAJ GUPTA TAX CLASSES – 9266664949, 9810398903

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