Taxmann's Tax Laws including GST & Customs Laws (Tax) | CRACKER | A.Y. 2023-24

PART II

INDIRECT TAXES (50 MARKS)

& SERVICES TAX (GST)

Chapter 22

ACT, 1962

APPENDIX: SECTION 115BAC : ALTERNATE TAX REGIME FOR INDIVIDUAL/ HUF A.1

SOLVED PAPER : JUNE 2023 (SUGGESTED ANSWERS) P.1

4

CHAPTER

INCOME FROM HOUSE PROPERTY

PAST EXAMINATION MCQs

1. Sajal is the owner of a house property covered under the Rent Control Act. Municipal value ` 30,000, actual rent ` 25,000, fair rent ` 36,000 and standard rent is ` 28,000. The gross annual value of the house property will be —

(A) ` 30,000

(B) ` 25,000

(C) ` 36,000

(D) ` 28,000 [Dec. 2014]

2. Composite rent of let-out house property is taxable as —

(A) Pro ts and gains from business or Profession

(B) Income from other sources

(C) Income from house property

(D) Either (A) or (B) above depending upon certain conditions [Dec. 2014]

3. Suresh owns two house properties. First property was used half for running his business and the other half was let-out at ` 4,000 p.m. The second property was wholly used as a residence by Suresh. Municipal values of the two properties were the same at ` 72,000 each p.a. and local taxes @ 10%. Suresh’s income from house property for the PY 2022-23 will be —

(A) ` 33,600

(B) ` 31,080

(C) ` 28,560

(D) ` 62,160 [Dec. 2014]

4. Rohit owns a house property in Delhi which he wants to give on rent. He seeks your help to determine the reasonable expected rent when monthly municipal value is ` 20,000, fair rent ` 25,000 and standard rent ` 22,000. The reasonable expected rent will be computed with reference to following amount p.m. —

(A) ` 22,000

(B) ` 20,000

(C) ` 25,000

(D) None of the above [June 2015]

5. When a house property is let-out throughout the year for a monthly rent of ` 22,000 and municipal tax paid for current year is ` 24,000 and for the earlier year paid now is ` 16,000, the income from house property would be —

(A) ` 1,68,000

(B) ` 1,56,800

(C) ` 1,84,800

(D) ` 2,24,000 [Dec. 2015]

4.1

PART I : DIRECT TAXES

6. When share of each co-owner in a house property is not definite, the income from such property shall be —

(A) Taxed equally

(B) Exempt from tax

(C) Taxed as association of persons

(D) Taxed as body of individuals [Dec. 2015]

7. Ramesh let-out his house on 1.4.2021 on rent of ` 15,000 p.m. The fair rent and the municipal value of house are ` 13,500 p.m. and ` 16,000 p.m. respectively. Municipal taxes paid for the year were ` 12,000. Income from house property for the AY 2023-24 will be —

(A) ` 1,26,000

(B) ` 1,76,000

(C) ` 1,05,000

(D) None of the above [Dec. 2015]

8. Ms. Padmaja let out a property for ` 20,000 per month during the year 2022-23. The municipal tax on the let-out property was enhanced retrospectively. Hence, she paid ` 60,000 as municipal tax which included arrears of municipal tax of ` 45,000. Her income from house property is —

(A) ` 80,000

(B) ` 1,57,500

(C) ` 1,26,000

(D) ` 36,500 [June 2016]

9. The construction of a house was completed on 31st January, 2023. The owner of the house took a loan of ` 20,00,000 @ 6% p.a. on 1st May 2022 In this case the deduction allowable for the previous year 202223 towards interest on borrowings is —

(A) ` 22,000

(B) ` 24,000

(C) ` 1,10,000

(D) None of the above [June 2016]

10. The municipal value of a property is ` 2,10,000. Fair rent is ` 1,90,000 standard rent is ` 1,80,000 and the actual rent is ` 2,40,000. The gross annual value of the property would be -

(A) ` 1,80,000

(B) ` 1,90,000

(C) ` 2,40,000

(D) ` 2,10,000 [Dec. 2016]

11. Mr. Ahmed acquired a property in April, 2022 for self-residential use. The loan interest payable to State Bank of India for the financial year 2022-23 amounts to ` 2,10,000. The amount eligible for deduction under section 24 is:

(A) ` 30,000

(B) ` 2,00,000

(C) ` 2,10,000

(D) ` 1,50,000 [June 2017]

12. A borrowed ` 5,00,000 @ 12% p.a. on 1.4.2018 for construction of house property which was completed on 15.3.2022. The amount is still unpaid. The deduction of interest for previous year 2022-23 shall be:

(A) ` 60,000

(B) ` 96,000

(C) ` 1,80,000

(D) ` 2,40,000 [June 2017]

13. When a house property is let out for a monthly rent of ` 25,000 during the financial year 2022-23 and maintenance expenses by way of salary to sweeper and watchman is ` 6,000

per month, the income from house property would be:

(A) ` 2,28,000

(B) ` 2,10,000

(C) ` 3,00,000

(D) ` 2,50,000 [Dec. 2017]

14. Mr. Bala transferred his let out residential property to his wife by way of gift settlement. During the financial year 2022-23, she earned rental income of ` 30,000 per month. She made fixed deposit in a bank out of such rental income and earned interest income during the year of ` 21,000. The total amount of income liable for clubbing in the hands of Mr. Bala for the assessment year 2023-24 is:

(A) Nil

(B) ` 21,000

(C) ` 2,52,000

(D) ` 2,73,000 [Dec. 2017]

15. Mr. Zen owns a flat in Mumbai which was let out by him in the previous year 2022-23 on a rent of ` 20,000 p.m. up to December, 2022 and for ` 30,000 p.m. Thereafter, the annual municipal value is of ` 3,00,000, Fair Rent is ` 2,50,000 and Standard Rent is ` 2,90,000. The gross Annual Value of the flat shall be taken as:

(A) ` 2,70,000

(B) ` 3,00,000

(C) ` 2,50,000

(D) ` 2,90,000 [June 2018]

16. Santhnam purchased in October, 2022, a flat in Chennai, to be used for his own residential purposes with the financial assistance of housing loan taken from PNB Housing Finance Ltd. He has paid interest on such loan till

March, 2023 of ` 1,78,780. The amount of interest paid on such loan allowed u/s 24 is :

(A) ` 1,25,000

(B) ` 1,78,780

(C) ` 1,50,000

(D) None of the above [June 2018]

17. Find out from the following income derived from house property which is being exempt from Income Tax:

(A) Income from property of a trust for charitable or religious purposes

(B) Income from property of a housing society

(C) Income from property of a trade association

(D) Income from property of a sports association [June 2019]

18. Z an assessee incurs expenditure for acquisition of an asset in respect of which payment (or aggregate of payment made to a person in a day), otherwise than by an account payee cheque/draft or use of ECS through a bank, exceeds ................, such payment shall not be eligible for claiming the amount of depreciation on such asset.

(A) ` 50,000

(B) ` 20,000

(C) ` 10,000

(D) ` 2,00,000 [June 2019]

19. Narendra engaged in retail trade let out his fully furnished house with lift, air conditioners, fridge, security staff and gardener at a rent of ` 1,00,000 per month. The agreement did not provide for separate rent for various facilities but is a composite agreement. The amount received by him would be chargeable to tax under the head:

4.4

(A) Other Sources

(B) Business Income

PART I : DIRECT TAXES

(C) Income from House Property

(D) Capital Gains [June 2019]

20. What will be the Gross Annual Value (GAV) of a house owned by Ramesh covered by Rent Control Act remained let out during the year 2022-23 of which;

(

i) Municipal value is ` 3,50,000

(ii) Actual (De Facto) Rent is ` 3,20,000

(iii) Fair Rent is ` 3,00,000, and

(iv) Standard Rent is ` 3,60,000

(A) ` 3,60,000

(B) ` 3,20,000

(C) ` 3,50,000

(D) ` 3,00,000 [Dec. 2019]

21. Santhnam purchased in October, 2021 with the financial assistance by way of housing loan provided by PNB Housing Finance Ltd. a flat in Chennai to be used exclusively for his own residential purposes. Interest on the housing loan till March, 2023 paid by him was of ` 2,18,780. He wants to know the amount of deduction to be available to him in respect of interest so paid on the housing loan while computing his income for A.Y. 2023-24.

(A) ` 30,000

(B) ` 2,18,780

(C) ` 1,50,000

(D) ` 2,00,000 [Dec. 2019]

22. House owned by Suresh was sold on 1st January, 2023 and till the date of sale, the house was on rent of ` 7,000 p.m. The other relevant details of this house are (i) municipal value ` 72,000 p.a. (ii) fair rent ` 66,000 p.a.

and standard rent ` 60,000 p.a. The income chargeable under the head House Property in A.Y. 2023-24 of this house shall be :

(A) ` 63,000

(B) ` 50,400

(C) ` 46,200

(D) ` 44,100 [Dec. 2019]

23. Pushpal, a non-resident India in the previous year 2022-23 was in receipt of rent of the house property located in Singapore of ` 30,00,000. The amount of rent was transferred and credited in the bank account of Pushpal, maintained with SBI, New Delhi by the tenant quarterly. However, the rent for the last quarter of ` 7,50,000 was not transferred by the tenant in the account of Pushpal till 31-3-2023. The Rental Income of the house located in Singapore which will be subject to tax in India under the head Income from house property in A.Y. 2023-24 shall be...................

(A) ` 22,50,000

(B) ` 21,00,000

(C) ` 15,75,000

(D) Not taxable as property is in Singapore and he is nonresident [Dec. 2020] 24. Find out with the help of given details/information, the gross annual value (GAV) of a house owned by Ramnath covered by Rent Control Act remained let out during the year 1-4-2022 to 1-4-2023:

(i) Municipal value ` 7,00,000

(ii) Actual (de facto) Rent ` 6,48,000

(iii) Fair Rent ` 6,60,000, and

(

iv) Standard Rent ` 7,20,000

(A) 7,20,000

(B) 6,48,000

(C) 7,00,000

(D) 6,60,000 [Dec. 2020]

25. Sonu had let out a house located at Jaipur to Monu since 1-4-2021 on a rent of ` 3,000 p.m. Monu paid the rent regularly up to 30-11-2021 and vacated the house on 31-3-2022 when it was sold by Sonu to Ramu. Sonu after great persuasion could recover an amount of ` 9,000 from Monu in July, 2022. The Income chargeable under House Property in A.Y. 2023-24 shall be .............

(A) ` 9,000

(B) ` 6,300

(C) NIL

(D) ` 6,750 [Dec. 2020]

26. Sreelekha let out a property on rent from 01.08.2022 which was self-occupied previously for residential purposes. The actual rent was ` 30,000 per month. The municipal value was ` 35,000 per month. The fair rent is ` 40,000 per month. Standard rent under the Rent Control Act is ` 32,000 per month. What is her income under the head “house property” for the assessment year 2023-24.

(A) ` 2,24,000

(B) ` 1,68,000

(C) ` 1,96,000

(D) ` 1,79,200 [June 2021]

27. Rajsekar owned three identical properties. He let out one property for a monthly rent of ` 50,000 during the financial year 2021-22. The other two properties are self-occupied by him. Compute his income under the head house property for the assessment year 2023-24.

(A) ` 8,40,000

(B) ` 12,60,000

(C) ` 4,20,000

(D) ` 3,40,000 [June 2021]

28. Siddharth has 3 houses in different buildings in Mumbai kept and used for self occupation. Treatment to be given in respect of income under the head house property relating to these 3 houses for A.Y. 2023-24 shall be :

(A) One house, at the option of Siddharth, will be treated as self-occupied. The other 2 houses will be deemed to be let out.

(B) One house at the option of A.O. will be treated as self-occupied. The other 2 houses will be deemed to be let out.

(C) Two houses, at the option of Siddharth, will be treated as self-occupied. The other house will be deemed to be let out.

(D) Two houses at the option of A.O., would be considered as selfoccupied. The other house will be deemed to be let out.

[Dec. 2021]

29. Rajneesh and Amarjeet are the co-owners of a house located at Delhi having 50% share each, which is being used by both of them as self-occupied property. The house was purchased in the year 2004 by taking the loan from SBI. The interest paid by each co-owner during the previous year 2022-23 on loan (taken for acquisition of property during the year 2004) is ` 3,05,000. The amount of allowable deduction in respect of interest paid to each of the co-owner when both of them do not opt for section 115BAC in A.Y. 2023-24 would be :

4.6

(A) ` 3,05,000

(B) ` 1,52,500

(C) ` 2,00,000

PART I : DIRECT TAXES

32. Abhinav has three residential house properties, all of which are self-occupied, the annual value of:

(D) ` 30,000 [Dec. 2021]

30. A House owned by Meghna and located at Jaipur was on rent till it was sold out in the month of March, 2021. She received an amount of ` 45,000 as arrears of rent from the tenant in the month of February, 2023. The taxable amount of arrears of rent so received by her in A.Y. 2023-24 would be :

(A) ` 31,500

(B) ` 22,500

(C) ` 45,000

(D) NIL [Dec. 2021]

31. Satish aged 45 years is having a house property at Hyderabad. The municipal valuation is ` 12,50,000 and fair rent of the property is ` 11,00,000. The standard rent is ` 11,50,000. He let out the property for a rent of ` 1,05,000 per month during the financial year 2022-23. Rent of March could not be realised despite all efforts, as the tenant have vacated the property. All the conditions for unrealised rent were satisfied. He had paid the municipal taxes of ` 2,30,000. He has paid an interest of ` 2,50,000 during the year for the amount borrowed for construction of the property. Compute the income from house property for Assessment Year 2023-24 ? (Assessee has not opted for section 115BAC) :

(A) ` 3,97,500

(B) ` 4,47,500

(C) ` 5,21,000

(D) ` 4,71,000 [June 2022]

(A) All the house properties shall be computed as if all these are deemed to be let out

(B) All the three house properties shall be Nil

(C) One house property shall be nil and for the other two properties, annual value shall be computed as if these are let out

(D) Two house properties shall be nil and for one house property annual value shall be computed as if it is deemed to be let out [Dec. 2022]

33. Javed borrowed ` 5,00,000 @ 12% p.a. on 1st April, 2014 for construction of let out house property whose construction was completed on 15th March, 2020. The loan was repaid on 31st August, 2022. The deduction of interest for previous year 2022-23 shall be :

(A) ` 60,000

(B) ` 85,000

(C) ` 25,000

(D) ` 30,000

34. Nishit was allowed deduction of unrealized rent to the extent of ` 1,20,000 in F.Y. 2021-22, although the total unrealized rent during the F.Y. 2021-22 was ` 1,60,000. In F.Y. 2022-23 he is able to recover from the tenant ` 90,000 on account of such unrealized rent. His Income under the head of House Property for assessment year 2023-24 is :

(A) ` 90,000

(B) ` 63,000

(C) ` 35,000

(D) ` 50,000 [Dec. 2022]

HINTS FOR IMPORTANT PAST EXAMINATION MCQs

3. House I: Part I used for business and hence not liable to tax.

:

= 4,000 × 12 = 48,000; NAV = 48,000 - 3,600 = 44,400

= 44,400 - 13,320 = 31,080

II: Self occupied.

5. 22,000 × 12 - 24,000 - 16,000 - 67,200 = 1,56,800

7. 16,000 × 12 - 12,000 - 54,000 = 1,26,000

8.

9. Construction of house is completed on 31.1.2023. Thus, deduction for interest on loan is allowed from PY 2022-23. Deduction for interest = 20,00,000 × 6% × 11/12 = 1,10,000.

12. Interest payable for the various years:

2018-19 (5,00,000 × 12%) 60,000

2019-20 (5,00,000 × 12%) 60,000

2020-21 (5,00,000 × 12%) 60,000

2021-22 (5,00,000 × 12%) 60,000

2022-23 (5,00,000 × 12%) 60,000

Since, construction of house is completed on 15.3.2022 i.e. in year 2021-22, interest payable up to year 2020-2021 will be pre-construction interest and 1/5th of 1,80,000 i.e. 36,000 will be allowed from PY 2021-22 to 2024-25 in ve equal instalments.

Total deduction for PY 2022-23 = 60,000 + 36,000 = 96,000.

14. If an individual transfers any house property to his or her spouse otherwise than for adequate consideration he shall be deemed to be owner. Hence rental income is taxable in the hands of Mr. Bala and clubbing provisions are not applicable.

Interest income of ` 21,000 will be taxable in the hands of Mrs. Bala and again clubbing provisions are not attracted.

20. Computation of Gross Annual Value (GAV)

1. Reasonable Expected Rent (RER) a.

23. Even though residential status of assessee is Non-resident and property for which rent is received is not in India, income will be chargeable to tax in India as the amount of rent is received in India. Such income from house property for Assessment Year 2023-24 (Relevant to Previous Year 2022-23) shall be computed as follows:

(in absence of Municipal Taxes paid)

Note:

` 7,50,000 not received during P.Y. 2021-22 cannot be said to be unrealised Rent and hence, no separate treatment is done for the same.

24. Computation of Gross Annual Value

1. Reasonable Expected Rent:

a. Municipal Value: ` 7,00,000

b. Fair Rent: ` 6,60,000

c. Higher of the two: ` 7,00,000

d. Standard Rent: ` 7,20,000

e. Reasonable Expected Rent (Lower of c and d): ` 7,00,000

2. Actual Rent: ` 6,48,000

3. Gross Annual Value (Higher of 1 and 2): ` 7,00,000

25. Unrealised rent received subsequently is taxed in that year in which it is actually received. Further, it is taxable under the head income from house property even if assessee is no longer owner of the house for which such rent is received. A deduction of 30% is allowed from such rent received.

Therefore, taxable income under the head house property for A.Y. 2023-24 (Relevant to P.Y. 2021-22) shall be ` 9,000 less (30% of ` 9,000) = ` 6,300.

26. Computation of Income from House Property Particulars Amount (`) Amount

PART I : DIRECT TAXES

Note:

Where property is self-occupied for part of the year and let out for part of the year, then to compute Gross Annual Value, Reasonable Expected Rent is to be considered for the entire year and the actual rent only for the months in which the property was let out.

In given MCQ, there is no option having answer of ` 2,68,800.

27. Computation of Income from House Property

Particulars Amount (`)

a. Gross Annual Value {` 50,000 × 12} 6,00,000

In absence of Fair Rent, Municipal Value & Standard Rent, Actual Rent received itself is GAV.

b. Less: Municipal Taxes paid -

c. Net Annual Value 6,00,000

d. Less: Deductions under section 24

a. Standard Deduction @ 30% of NAV (1,80,000)

b. Interest on Borrowed Capital -

e. Income from House Property 4,20,000

Note: For self-occupied property, Net Annual Value shall be Nil. Any two properties, at the option of the assessee can be shown as self-occupied. Therefore, in this case, Income from only the Let Out Unit shall be considered as for the two Self occupied Units, it shall be Nil.

29. Amount of deduction under section 24(b) of the Income-tax Act, 1961 shall be restricted to ` 2,00,000 being the ceiling limit for self-occupied property. Hence, interest allowable as deduction for each of the co-owner shall be ` 3,05,000 being the actual interest paid or; ` 2,00,000, whichever is lower, therefore ` 2,00,000. It must be noted that it is specifically given that ` 3,05,000 is the interest on housing loan paid by each of the co-owner (It is NOT the total interest paid)

31. Computation of Income from House Property of Mr. Satish -

TAX LAWS INCLUDING GST & CUSTOMS LAWS (TAX)

CRACKER | A.Y. 2023-24

AUTHOR : N.S. ZAD

PUBLISHER : TAXMANN

DATE OF PUBLICATION : JULY 2023

EDITION : 14th Edition

ISBN NO : 9789357780872

NO. OF PAGES : 400

BINDING TYPE : PAPERBACK

DESCRIPTION

This book is prepared exclusively for the Executive Level of Company Secretary Examination requirement. It covers the questions & detailed answers strictly as per the old syllabus of ICSI.

The Present Publication is the 14th Edition for CS-Executive | Old Syllabus | Dec. 2023 Exam. This book is authored by CS N.S. Zad, with the following noteworthy features:

• Coverage of this book includes:

o All Past Exam Questions, including:

- CS Executive June 2023 | Suggested Answers

o [Practical MCQs] with hints

• [Most Updated & Amended] Solutions in this book are provided as per the following:

o [Income Tax Solutions] as per Assessment Year 2023-24

o [GST/Customs Solutions] are amended & updated as per the latest GST Laws

• [Marks Distribution] Chapter-wise marks distribution from June 2015 onwards

• [Comparison with ICSI Study Material] is given chapter-wise

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