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Chargeability - Section 22 - Income Tax - Ready Reckoner - Income TaxExtract Section 22 : CHARGEABILITY The Annual Value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner is chargeable to income tax under the head Income from house property . CONDITIONS FOR CHARGEABILITY Property should consist of any building or land appurtenant thereto Income from letting out of vacant land is taxable under the head Income from other sources . Assessee must be the owner of the property Owner is the person who is entitled to receive income from house property in his own right. The requirement of the sale deed is not warranted. Ownership includes deemed ownership. If the title of the ownership of the property is under dispute in a Court, the decision as to who will be the owner chargeable to income tax u/s 22 will be the Income Tax Dept. till the court gives its decision. The property may be used for any purpose EXCEPT by the owner for the purpose of any business or profession carried on by him, the profit of which is chargeable to tax. Property held as stock in trade etc. Annual value of HP will be charged u/h IHP in the following cases also: Where it is held by the assessee as stock in trade of a business Where the assessee is engaged in the business of letting out of property on rent. Exceptions The annual value of such portions of the property, which is occupied by the assessee for the purpose of any business or profession carried on by him, the profit of which is chargeable to tax, is not chargeable to tax u/h IHP. Letting out is supplementary to the main business : Where the property is let out with the object of carrying on the business of the assessee in an efficient manner then the rental income is taxable as business income provided letting is not the main business but it is supplementary to the main business. Letting out of building along with other facilities : Where a commercial HP, is let out along with other assets i.e. plant machinery etc. and the two lettings are inseparable; the income will either be assessed as business income or IOS. If the owner of the property is an Individual/HUF who is a partner in a firm and such property is used by that firm for carrying on Business/Profession, then property is considered to be used for Business purpose. If the property is owned by HUF and any member of HUF is the partner in his individual capacity then income shall be taxable under this head. If the property is given on rent for purpose like marriage, organising fair etc. then it is not taxable under this head but under Income from Business/Profession - section 28 . If property is located outside India, then also tax is computed under this head.
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