People always feel confused if we talk about income tax on house
property whereas income tax laws are well defined on income from house
property. Income tax on house property is well defined as any income from
property which is let out on rent will be taxed under the head income from
house property. The income will be deduct with any municipal tax paid, any
interest re-payment on loan taken on the same property as well as standard
deduction which is 30%.
In second condition if the house property is not rent out and used
by him, then the value of the property will be deemed as nil while computing
the annual value of property for tax purpose.
In third situation if the individual has his own property and he
does not live in this house for any reason being employment or business or
profession in another city, and he live in another house which is not own by
him, the property which is in another city and which is not occupied by him
will be deemed self occupied property and annual value will be treated as zero
while computing the annual value for income tax.
Some judicial cases were also held that if an individual has his
own property but doesn’t resides that property, the same will be deemed as his
self occupied house and the annual value will be treated as zero. But this relief
(not necessary as self occupied) is only available to individual tax payer and
not to any other category of income tax payee. In income tax provision the term
“his own residence” means the property should be of individual to claim this
benefit. Companies and partnership firms are not living entities and cannot
claim that relief as they cannot be called his own residence. The tern his own
residence is for physical reside and not for fictitious entities.
One recent case was held by the honorable Gujarat High Court, the
income tax assessee was HUF and not an individual. HUF made claim that relief
on house property as self occupied property. The HUF firm getting income from house
properties. The assessing officer denied the claim of relief on self occupied
house as it is only available to an individual and not to fictitious entities.
The HUF firm applies the case to appellate level, where the case
was rejected as the relief is not for HUF. The firm went to Tribunal and the
Income tax Tribunal at the second level of appellate level gives the case in favor
of HUF Firm and allowed to make claim of relief to HUF as well.
Income tax department read my decisions given on different cases
and also analysis the cases other than income tax. One of the similar cases was
of wealth tax in which exemption is only available to the individual for his
residential purpose only. The department also studied the case in which the
same relief was denied by the court in partnership firm. In one case the
Gujarat high court ruled that HUF can reside in the house owned by it and is
allowed to claim the exemption in wealth tax.
So in this case Honorable Gujarat high court ruled that HUF is the
group of persons having blood relation and it is not a fictitious entity like
partnership firm or company. HUF consist of natural people and only a group of
natural people including men, women and children includes in it. So how can one
dispute in it that only an individual and not a family can reside in a house.
In India almost in every house family and not only an individual lives in the
house.
HUF is the Hindu undivided family and a family consists of real
persons and not artificial persons. The honorable court also ruled that his own
is also called their own and owner can also be called owners for calculating
the relief under income from house property.
Tags-income from house property to huf,huf law on income from house property
