Tax liability in respect of arrears of Rent Section 25A, Section 56, Section 26, Section 22/27

Tax liability in respect of arrears of Rent Section 25A

Sometimes rent of a house property may be increased from retrospective effect i.e from back date and the assessee may receive arrear of rent, such arrears are taxable in the year in which arrears have been received, however  deduction shall be allowed @ 30% of such arrears and only the balance amount shall be taxable. It do not matter that the assessee do not have any house property in his name in the year. No provision isgiven in the Income Tax Act relating to advance payment of rent.

Sub-letting of House Property Section 56

If any person has let out any house property and the tenant has further given the same house property on rent, it is called sub-letting and in this case, income of the person who has sub-let the house property shall be computed under the head Other Sources and income shall be equal to gross rent received- expenses incurred for such house property.

Owner /Deemed Owner Section 22/Section 27

As per section 22, the owner of the house property shall be liable to pay income tax and if the title of the ownership of the property is under dispute in a court of law, the decision as to who will be the owner chargeable to income-tax under section 22 will be of the Income-Tax Department till the court gives its decision to the suit filed in respect of such property.

As per section 27, the following person, are deemed to be the owners

Transfer of a house property to spouse:-

In case of transfer of house property by an individual to his or her spouse otherwise than for adequate consideration, the transferor is deemed to be the owner of the transferred property. In case of transfer to spouse in connection with an agreement to live apart, the transferor will not be deemed to be the owner. The transferee will be the owner of the house property. In case of transfer of house property by an individual to his or her minor child, the transferor is deemed to be the owner of the house property transferred. In case of transfer to minor married daughter, the transferor is not deemed to be the owner.

Person in Possession of a property:-

If Possession of house property is given by a person and has received full amount of payment but has not transfered the ownership in document, In such case proposed buyer is the deemed owner and shall be liable to pay income tax and it is called part performance of a contract of the nature referred to in section 53A  of the transfer of property Act.

Member of a co-operative society etc:-

If any allotment or Leased or part of Building is given to a Member of a co-operative society under a House Building Scheme of a society/company/association shall be deemed to be owner of that building or part thereof allotted to him although the co-operative society/company/association is the legal owner of that building.

Holder of an important estate:-

The impartible estate is a property which is not divisible. The holder of an impartible estate shall be deemed to be the individual owner of all properties comprised in the estate.

Section 22 for House property situated in foreign country.

If Income is received from such property in India than a resident but not ordinary resident or a non resident is taxable under section 22.

Disputed ownership in House Property.

If the title of ownership of the house property is under dispute in acourt of law, the decision about who is the owner lies with the court but till then income tax shall be required from the person who is beneficial owner of the house property.

 

 

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