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Income from House Property for CFP – 1

Posted by Prashant Shah on May 31, 2012


Income is chargeable under this head if the following three conditions are satisfied:
  1. The property should consist of any building or lands appurtenant thereto
  2. The assessee  should be the owner of the property
  3. The property should not be used by the owner for the purpose of any business or profession carried on by him of which the profits are chargeable to income tax


  • If owner of the property uses it for business profession of which income is taxable, annual value of the property is not taxable
  • This rule is applicable even if income of the business or profession is nil
  • The reason seems to be that the notional rent of the property is not allowable as a permissible deduction while computing business income

Income from house property is chargeable in the hands of Owner. Hence lets understand who the owner is?


  1. The word owner means a legal owner
  2. Owner may be an individual, firm, company, co-operative society or association of persons
  3. Annual value of the property is assessed in the hands of owner

Deemed Owner

Legal ownership may vest with one person while taxability arises for the other person who is a deemed owner

Instance: If the property is transferred to spouse (not being a transfer in connection with an arrangement to live apart) or to minor child (not being a married daughter) without adequate monetary consideration, individual who transferred the property would be deemed as owner

Income from subletting

  • Income from subletting is not taxable as income from house property
  • Rental income from subletting is taxable as income under the head income from business profession or income from other sources
  • Example: X owns a property and lets it out to Y. Y sublets to Z.
  • Income of X is income from HP

Income of Y is income from business profession or income from other sources


Gross Annual Value xxx
Less: Municipal Taxes xxx
                                                  Net Annual Value xxx
Less: Deduction u/s 24  
         Standard Deduction xxx
         Interest on Borrowed Capital xxx
                           Income From the House Property xxx

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