Assignment - Taxation | Income Tax for assessment (Inter Level) PDF Download

P1:(Page 4.14) Mr. Taxcrazy started the construction of a house on 1-4-2014 and it was completed on 31-5-2016. This house consists of three residential units. First unit covers 50% area of the whole house while each of the second and third unit covers 25% area of the whole house. A loan of 1,00,000 was taken on 1-10-2015 for the construction of this house, the interest is payable @ 10% p.a. on it. 50% portion of the house is used by Taxcrazy for his own residence since 1st June, 25% portion of the house was let out to Sameer from 1st August at a rent of 1,250 p.m. and the remaining 25% portion was also let out to Pooja from 1st October, at a rent of 1,250 p.m. Pooja vacated 25% portion on 31st December and Taxcrazy used this portion also for his own residence from 1st January, 2017. The municipal valuation and fair rent of the whole house is 48,000. Local taxes are paid @ 10% of the municipal valuation. The details of the expenditure of this house are as under
1. Municipal tax paid (for 10 months) 4,000
2. Interest on loan paid (from 1-10-2015 to 31-3-2017) 15,000
Compute the Income from House Property for the AY 2017-18.

Ans: (1,900) Let out 3,600; SOP for residence (5,500).

P2:(Page 4.14) Mr. X owns a house in Delhi. During the previous year 2016-17, 3/4th portion of the house was self-occupied for full year and 1/4th portion was let out for residential purposes from 1-4-2016 to 31-12-2016 on a rent of 1,400 p.m. From 1-1-2017 this portion was also used for own residence. Municipal valuation of the house is 20,000. He incurred the following expenditure in respect of the house property. Municipal taxes due 12,000; Repairs 4,000; Fire insurance premium 7,000; Land Revenue 8,000; Ground Rent 4,000 were paid during the year. A loan of 2,00,000 was taken on 1-4-2012 @ 9% p.a. for the construction of the house which was completed on 28-3-2013. Nothing was repaid on loan account so far.
Find out his income from house property for the assessment year 2017-18.

Ans: (6,240) [16,800 – 0 = 16,800 – 5,040 – 4,500 = 7,260 – 13,500 = – 6,240]

P3:(Page 4.14) Mr. X owns a house in Delhi. During the previous year 2016-17, the house was self-occupied for 2 months and for remaining period it was let out for residential purposes from 1-6-2016 to 31-1-2017 on a rent of Rs. 6,000 p.m. From 1-2-2017 it was let out for Rs. 8,000 p.m. Find out his income from house property for the assessment year 2017-18.

Ans: 53,760.

P1:(Page 4.15) Soha and Joha are two sisters, fashion designer, who have inherited four houses from their father. The first house is residential in which both the sisters are living in equal parts. Both the sisters took a loan from bank and got renovated their respective portions. On 1-4-2016 Soha took a loan of 60,000 @ 16% p.a. rate of interest and on 1-5-2016 Joha took a loan of 50,000 @ 15% p.a. rate of interest. The fair rent of the house is 1,20,000.

The second house has been let out to a bank at a rent of 15,000 p.m. Municipal tax of 10,000 has been paid in respect of this house.
The third house is in Delhi which is kept vacant by both the sisters for their self use, because every year they stay in Delhi for two or three months and live in this house only. The expected rent of this house is 2,50,000.
Each sister holds half portion of this house.

Fourth house has two residential units. Each unit has been let out at 3,000 p.m. for residential purposes.
Municipal tax of 4,000 has been paid for this house. Later one tenant started doing his business in this unit, and took another house in his neighbourhood for his residence, on rent.
Compute the income from house property of Soha and Joha for the AY 2017-18.

Ans: 1,15,700; 1,18,425.

P1:(Page 4.16)  A and B construct their houses on a piece of land purchased by them at New Delhi. The built up area of each house is 1,000 sq. ft. (ground floor and an equal area in the first floor). A starts construction on April 1, 2015 and completed it on March 31, 2016. B starts the construction on April 1, 2015 and completes the same on June 30, 2016. A occupies the entire house on April 1, 2016. However, B occupies the ground floor on July 1, 2016 and lets out the first floor for a rent of 15,000 per month. The tenant vacates the house on December 31, 2016 and B occupies the entire house during the period January 1, 2017 to March 31, 2017.

The following is the other information :
Fair rental value of each unit (ground floor/first floor) (per annum) - 1,00,000
Municipal value of each unit (ground floor/first floor (per annum) - 72,000
Municipal taxes paid by
A - 8,000
B - 8,000
Repair and maintenance charges paid by
A - 28,000
B - 30,000
A has availed a housing loan of 20 lakh @ 12 per cent on April 1, 2015. B has availed a housing loan of 12 lakh @ 10 per cent on July 1, 2015. No repayment is made by either of them till March 31, 2017.
Compute income from house property for A and B for the assessment year 2017-18. (PE II - N03)

Ans: (1,20,000); (52,800); (69,000); (8,800)

P2:(Page 4.16) Mr. Taxcrazy owns a house property in Kolkata which is let out to Amir Khan on a composite rent of 6,000 p.m. Municipal tax levied @ 5% of the municipal valuation which during the PY amounted to 5,000. Half of the municipal taxes are borne by the tenant while remaining amount of municipal taxes were outstanding at the end of the PY. However Mr. Taxcrazy paid 4,350 of the municipal taxes during the PY which were outstanding for the PY 2014-15. Fair rent of the house is 80,000. Standard rent is not applicable. The total rent realised by the Taxcrazy during the year is 60,000. Amir Khan vacated the house at the end of February.
Amir Khan is provided with following amenities :

Mr. Taxcrazy also owns a residential plot of land in Delhi which is let out to a warehousing company at the rent of  16,000 p.m.
Compute total income for the AY 2017-18 on the assumption that Rule 4 conditions are satisfied.

Ans: 2,53,220. [1,00,000 – 5,650 = 94,350 – 4,350 = 90,000 – 27,000 = 63,000 + 3,500 – 5,280 + 1,92,000 = 2,53,220]

P3:(Page 4.16) Mr. Taxcrazy owns two houses at Jamnagar. Municipal value of these houses are 56,000 including 20,000
for municipal value of first house.

Fair rent of first house is 24,000 p.a. During the PY 2016-17 this house was used by him for his own residence from 1-4-2016 to 30-6-2016 and let out from 1-7-2016 @ 2,500 p.m. as he was transferred. Tenant vacated this house on 1-2-2017 and it remained vacant in search of tenant.
In respect of house property he paid municipal taxes 6,000. A loan of 30,000 was taken on 31-3-2011 @ 15% p.a. for the construction of house. On 1-4-2013 he took another loan of 30,000 @ 10% p.a. to repay this loan.

This house was completed on 1-4-2014. During the PY 7,000 was paid as interest including interest of earlier years. Nothing was repaid on loan account so far.He treats his second house also as self occupied because his friend resides thereat. Fair rent of this house is  4,000 p.m. He paid municipal taxes @ 10%. He obtained a loan of Rs. 50,000 @ 12% p.a. from his friend in USA who is non-resident Indian. During PY interest was paid to him without any tax deducted at source. Earlier this house was let out to a tenant. He claims bad debts of Rs. 8,000 because a long pending court case is not yet decided.He incurred Rs. 2,000 in this regard during previous year.

Find out his income from house property for the AY 2017-18.

Ans: 3,700 + 31,080 = 34,780.

P4:(Page 4.17) Mr. Taxcrazy is the owner of the two houses. The municipal valuation of the first house is 30,000. One half of this house has been let out at a rent of 3,000 p.m. and the other one half is occupied by him for his own residence. He took a loan of 1,00,000 on 1-1-2009 for the purpose of construction of this house @ 10% p.a. which is still unpaid. There was a delay in payment of instalments so he paid 2,000 as interest on delayed
interest. The construction of this house was completed on 31-12-2012. Municipal taxes paid on this house during PY was 3,000.

The second house, whose fair rent is 28,500 p.a. was let out till 30-6-2016 at a rent of 2,000 p.m. This house remained vacant for six months then it was let out at a rent of 2,500 p.m. from 1-1-2017 Municipal taxes paid during the PY was 1,500.

10,000 was received in the PY as arrears of rent with retrospective effect. He incurred 1,000 for legal charges in this respect. 500 was recovered in the PY 2016-17 against a bad debt allowed in earlier years. This house was sold in PY 2014-15.

He has started construction of a bungalow for self residence on 1-7-2015. For this purpose he took a loan of 8,00,000. Construction was not completed upto 31-3-2017 and interest was due 40,000 on loan amount.
Calculate income from house property for the AY 2017-18.

Ans: 23,550.

P5:(Page 4.17) Mr. Narendra is owner of four houses the Municipal valuation of these houses are 12,500; 16,000; 12,000 and 30,000 respectively. The Municipality levies 10% tax on the Municipal value of these houses. In first house Narendra resides himself & in second house he runs his own business the profit of which during the previous year amounted to 1,00,000. The other two house have been let out at a monthly rent of 750 and  2,750 respectively.

The fourth house remained vacant from April to July, The unrealised rent of the past years in respect of the fourth house amounted to 32,000. The unrealised rent of 8,000 in respect of thirds house for past years were realised during the previous year. It was allowed to deduction. 800 were spent on its realisation.

During the previous year the municipal taxes of first and second house were not paid, while in respect of third house two years municipal taxes were paid by Shri Narendra. Half of the municipal taxes in respectively of fourth house were paid by the tenant while the remaining half were outstanding.

The construction of all the houses was started in June, 2009. the construction of first and second house was completed in December, 2010 while the construction of third and fourth house was completed on 30th June, 2012 and 31st December, 2013 respectively. For the construction of these houses a loan of 4,00,000 was taken from Life Insurance Corporation on 1st October, 2009 at an interest rate of 12% per annum which is still outstanding. The amount of loan was utilised equally for all the houses.

Compute the taxable income from House Property of Mr. Narendra for the assessment year 2017-18.

Ans: (22,680)

P6 :(Page 4.17)  He has let out his farm house on an annual fees of  3,000. The farm house is located in Portugal. Municipal value of farm house as per Portugal law is  40,000. Municipal tax paid  10,000.

Ans: 21,000.