The Reader

Dear Friends,

Section 23 (1) provides for determination of Annual value.  It may that the property or any part of the property is let out.   

Section 23(2) provides that if  case the house or a part of the house is occupied by the owner for the purposes of his own residence,

                       than  Annual Value of such house or part of the house shall be taken to be nil. 

Section 23(3) provides that section 23(2) would not apply if the house or a part of the house is actually let for whole or part of the previous year.

                       (Provision whether qua house or qua part of the house ? )

Now the points which arise here are :-  

a)      Whether the provisions are applicable in respect of the house as a whole or are applicable to each part of the house i.e. where the property in part is let out.

b)      Suppose the property (residential flat)  in part  300 sq ft out of  1000 sq ft is let out, then in that case how the Annual value is to be determined ? 

Whether the ratio of 70:30 is to be applied for ? 

c)      Whether the benefit u/s 23(2) is available (i.e. 70% portion) in respect of Annual Value – computing   Nil  being self use of property.

d)     Since the paying guest accommodation is one of the forms of letting out and the substance remains intact i.e. deriving income from the property, can it be safely assumed that income derived from paying guest accommodation is in the nature of income from House Property and not the Income from under the head Income from Other Sources.  

e)      From the above :-

i)                    Can it be safely said that property in part (i.e.  30%) on paying guest accommodation is let out and deduction u/s 24 ( 30% of annual value) is available thereon ?

ii)                  Can it be safely said that for other part of the property (i.e. 70%) which is for self use be considered u/s 23(2) and the Annual Value computed as Nil ?

f)       Pl provide any case law on this.

Regards,

CA Pravin Kapadia

Kandivali West, Mumbai-67

Mobile : 9820333162