CONDITION FOR CHARGEABILITY

CONDITIONS FOR CHARGEABILITY

(1) Property should consist of any building or land appurtenant thereto.

(i) Buildings include not only residential buildings, but also factory buildings, offices, shops,
godowns and other commercial premises.

(ii) Land appurtenant means land connected with the building like garden, garage etc.
It may be noted that Income from letting out of vacant land is, however, taxable under the
head “Income from other sources”.

(2) Assessee must be the owner of the property

(i) Owner is the person who is entitled to receive income from the property in his own right.

(ii) The requirement of registration of the sale deed is not warranted.

(iii) Ownership includes both free-hold and lease-hold rights.

(iv) Ownership includes deemed ownership (discussed later in para 5.11)

(v) The person who owns the building need not also be the owner of the land upon which it
stands.

(vi) The assessee must be the owner of the house property during the previous year. It is
not material whether he is the owner in the assessment year.

(vii) 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.

(3) The property may be used for any purpose, but it should not be used by the owner for the purpose of any business or profession carried on by him, the profit of which is
chargeable to tax.

The income earned by an assessee engaged in the business of letting out of properties on
rent would also be taxable as business income and not as income from house property
[Rayala Corporation (P) Ltd. v. Asstt. CIT (SC) (2016) 386 ITR 500].

(4) Property held as stock-in-trade etc.
Annual value of house property will be charged under the head “Income from house
property”, where it is held by the assessee as stock-in-trade of a business also.
However, the annual value of property being held as stock in trade would be treated as NIL
for a period of one year from the end of the financial year in which certificate of completion of
construction of the property is obtained from the competent authority, if such property is not
let-out during such period [Section 23(5)].