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