Taxation Exam > Taxation Notes > Income Tax for assessment (Inter Level) > Special Cases (Part - 1) - Taxation
Special Cases (Part - 1) - Taxation | Income Tax for assessment (Inter Level) PDF Download
P2: Find out Income from House Property for the AY 2017-18. GAV 1,50,000; MT due for PY 2012-13 14,000; MT due for PY 2014-15 6,000; MT due for PY 2015-16 1,000; MT due for PY 2016-17 8,000; MT of PY 2017-18 11,000. The payment of all MT being 40,000 is paid on 7-3-2017.
Ans: 77,000.
P3: Compute Income from House Property for the AY 2017-18.
|
Houes 1 Let out for |
House2 Let out for |
House 3 SOP for |
|
| Fair Rent | 1,50,000 | 2,00,000 | 60,000 |
| Actual Rent | 12,000 p.m. | 20,000 p.m. | NA |
| Vacancy | NA | 1 month | NA |
| Self occupied for residence | 2 months | NA | NA |
| Municipal tax paid by owner on 1-1-2016 | 6,000 | 4,000 | 2,000 |
| Interest on borrowed capital | 36,000 | 40,000 | 45,000 |
Ans: 1,83,000.
Solution
| House 1 | House 2 | |
| Expected Rent | 1,50,000 | 2,00,000 |
| Actual Rent | 1,50,000 | 2,40,000 |
| Vacancy | nil | 20,000 |
| Gross Annual Value | 1,50,000 | 2,20,000 |
| Municipal tax paid by owner [not allowed since paid in PY 2016-17] | nil | nil |
| Net Annual Value | 1,50,000 | 2,20,000 |
| Less : Standard deduction | (45,000) | (66,000) |
| Less: Interest on borrowed Capital | (36,000) | (40,000) |
| Income from House Property | 69,000 | 1,14,000 |
P4: From the following information, find out the income from the house property which is let out for 9 months and self-occupied as residence for 3 months:
| Rent received for 9 months (per month) | 3,000 |
| Annual municipal valuation | 40,000 |
| Fair rent | 42,000 |
| Municipal taxes : 10% of municipal valuation (only 80% was paid) | |
| Interest on borrowed capital | 20,000 |
| Annual Charges and ground rent were also paid | 15,000 |
Ans: 7,160.
P5: (A) Mr. Taxcrazy purchased a house on 1-5-2016 and was let out on same day at a rent of 5,000 p.m. On 1-11-2016 the tenant vacated the house and it remained vacant for two months. From 1-1-2017 it was again let out at a rent of 7,000 p.m. During the PY he paid 1,000 as municipal tax and interest on borrowed capital 12,000. You are required to compute Income from House Property for the AY 2017-18 on the following assumption :
Case 1: Standard rent 60,000; Fair rent 72,000.
Case 2: Municipal valuation 50,000; Fair rent 72,000.
(B) Solve if the property self occupied for residence instead of remaining vacant.
Ans: (A) 23,000; 23,700; (B) 25,800; 33,500.
Section 23(2)(a). Self-occupied for Residence
Where the building is occupied for self residence for whole year by
| • Owner | Treated as SOP-residence |
| • Family member of owner | Treated as SOP-residence |
| • Others | Treated as Deemed to be Let out Property. (DLOP) |
Computation of income from house property of SOP for residence for whole year
Gross annual value is deemed to be nil and no deduction is allowed except interest on borrowed capital which is maximum of Rs. 30,000. However if all the following conditions are satisfied then maximum of Rs. 2,00,000 is allowed as deduction.
| a. | Date of Borrowing | The loan is borrowed on or after 1-4-1999. |
| b. | Purpose of loan | The loan is borrowed for the purpose of purchase or construction of residential house property |
| c. | Completion of construction | The residential property is purchased or construction is completed within 5 years of the end of the financial year in which loan is borrowed. (FY DOB + 5 years) |
Note 1: Overall deduction on account of interest cannot exceed Rs. 2,00,000.
P1 : Compute the interest allowed as deduction u/s 24.
| Loan 1 | Loan 2 | ||
| Purpose of loan | Construction | Repairs | |
| Date of borrowing | 1-6-2012 | 1-6-2012 | |
| Date of purchase | 9-1-2015 | NA | |
| Situation 1 | Interest on borrowed capital | nil | 40,000 |
| Situation 2 | Interest on borrowed capital | 2,30,000 | nil |
| Situation 3 | Interest on borrowed capital | 70,000 | 35,000 |
| Situation 4 | Interest on borrowed capital | 2,05,000 | 45,000 |
Ans: 30,000; 2,00,000; 1,00,000; 2,00,000.
Computation of Income from all types of properties
| Municipal Tax | Standard Deduction | Interest | ||
| a. | Let out property | allowed | allowed | no limit |
| b. | Deemed to be let out property | allowed | allowed | no limit |
| c. | Vacant property for whole year. | allowed | Not available | no limit |
| d. | Self occupied property for residence. | Not allowed | Not allowed | limit It |
P2: Compute Income from house property from the following informations :
| House 1 | House 2 | House 3 | |
| Expected Rent | 1,20,000 | 1,30,000 | nil |
| Actual Rent | 15,000 p.m. | N.A. | N.A. |
| Self occupied property for residence | 10 months | 12 months | N.A. |
| Vacancy | N.A. | N.A. | 12 months |
| Municipal tax paid | 6,000 | 8,000 | 10,000 |
| Interest on borrowed capital for repairs | 60,000 | 70,000 | 31,000 |
The document Special Cases (Part - 1) - Taxation | Income Tax for assessment (Inter Level) is a part of the Taxation Course Income Tax for assessment (Inter Level).
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FAQs on Special Cases (Part - 1) - Taxation - Income Tax for assessment (Inter Level)
| 1. What are some special cases in taxation? |  |
Ans. Special cases in taxation refer to specific situations or circumstances that require unique considerations or rules when it comes to tax calculations or exemptions. These cases may involve individuals, businesses, or certain types of transactions that deviate from the usual tax guidelines.
| 2. Can you provide examples of special cases in taxation? | |
Ans. Yes, some examples of special cases in taxation include:
- Taxation of foreign income: When individuals or businesses earn income from overseas, there may be specific rules and regulations regarding how this income is taxed. These rules can vary depending on the country and may involve concepts such as double taxation relief or foreign tax credit.
- Taxation of capital gains: Capital gains tax is applicable when individuals or businesses sell assets such as stocks, real estate, or investments at a profit. However, there are cases where certain assets or transactions may be subject to different tax rates or exemptions, such as the sale of a primary residence or investments held for a certain period.
- Taxation of gifts and inheritances: In some jurisdictions, gifts or inheritances may be subject to specific tax rules. For example, there may be exemptions or thresholds for the amount of the gift or inheritance before it becomes taxable.
- Taxation of non-profit organizations: Non-profit organizations or charities often have special tax considerations. They may be eligible for tax-exempt status or receive certain benefits for their activities, but there are specific requirements and regulations they must adhere to in order to qualify.
- Taxation of special industries or sectors: Certain industries or sectors may have unique tax considerations due to their nature or importance. This can include sectors like agriculture, energy, or technology, where specific tax incentives or deductions may be available.
| 3. How do special cases in taxation affect individuals and businesses? | |
Ans. Special cases in taxation can have various impacts on individuals and businesses. These cases may introduce additional complexities, exemptions, or considerations that individuals or businesses need to be aware of when calculating and filing their taxes. Depending on the specific case, it may result in different tax rates, deductions, or reporting requirements. It is crucial for taxpayers to have a good understanding of any special cases that may apply to them to ensure compliance with tax laws and to optimize their tax situation.
| 4. Are special cases in taxation the same in every country? | |
Ans. No, special cases in taxation can vary from country to country. Each jurisdiction has its own tax laws and regulations, which may include specific provisions for certain situations or industries. It is essential to consult the tax laws and guidelines of the specific country in question to understand the special cases that may apply.
| 5. How can individuals and businesses stay informed about special cases in taxation? | |
Ans. To stay informed about special cases in taxation, individuals and businesses can take the following steps:
- Stay updated with tax laws and regulations: Regularly review the tax laws and regulations of the relevant jurisdiction to ensure awareness of any changes or updates that may impact their tax situation.
- Seek professional advice: Consult with tax professionals or specialists who have expertise in the specific area or industry. They can provide guidance on any special cases that may apply and help with tax planning and compliance.
- Utilize official resources: Use official government websites, tax authorities, or publications to access accurate and up-to-date information on special cases in taxation.
- Attend tax seminars or workshops: Participate in tax-related seminars, workshops, or webinars organized by reputable organizations or tax authorities. These events often cover special cases and provide insights into their implications.
- Network with peers: Engage with professionals or individuals in the same industry or sector to exchange knowledge and experiences regarding special cases in taxation. This can be done through industry associations, forums, or networking events.
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