Income From Property Chapter- 08
Where any unpaid rent allowed above as a deduction is wholly or partly recovered, the amount
recovered shall be chargeable to tax in the tax year in which it is recovered.
Non payment of already allowed expenditure within three years [U/s 15A(3)]
Where a person has been allowed a deduction for any expenditure incurred in deriving rent
chargeable to tax and the person has not paid the liability or a part of the liability to which the
deduction relates within three years of the end of the tax year in which the deduction was allowed, the
unpaid amount of the liability shall be chargeable to tax under income from property in the first tax
year following the end of the three years.
Partial of full payment after disallowance of expenditure [U/s 15A( 4 )]
Where an unpaid liability is chargeable to tax as a result of the application of sub-section (3) and the
person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction
for the amount paid in the tax year in which the payment is made.
Limitations on allowable expenditures [U/s 15A(5) & (6)]
Any expenditure allowed to a person under this section as a deduction shall not be allowed as a
deduction in computing the income of the person chargeable to tax under any other head of income.
[U/s 15A(5)]
The provisions of section 21 shall apply in determining the deductions allowed to a person under this
section in the same manner as they apply in determining the deductions allowed in computing the
income of a person chargeable to tax under the head “Income from Business”. [U/s 15A(6)]- Examples of “Income from Property” not taxable under this head
(1) Lease income of a building that is let out together with plant and machinery e. g. a flour mill.
[U/s 15(3) and 39(1)(f)]
(2) Rent from the sub lease (by tenant) of land or a building. [U/s 39(1)(e)]
Explanation: Any amount received or receivable as consideration for the use or occupation, or
right to use or occupy, of any land or building not owned by the taxpayer falls under the head
“income from Other Sources”.
(3) Provisions of amenities, utilities or any other service connected with the renting of the building.
(Quote practical case) [U/s 15(3A) and 39(1)(fa)]
(4) Ground rent of land (Quote practical case) [U/s [39(1)(d)]; and
(5) Amount received as consideration for the provision, use or exploitation of property, including
from the grant of a right to explore for, or exploit natural resources. [U/s 39(1)(i)]
(6) Income from a building used as store house in the surrounding area of agri land. [U/s 41]
(7) 1/10th of excess from already deposited amount received by tenant on vacating the possession
of a property. [U/s 39(1)(k) & (2)]- Treatment of utilities included in rent: [U/s 15(3A)]
Where any amount is included in rent received or receivable by any person for utilities or any other
services connected with the renting of the building, such amount shall be chargeable to tax under the
head income from other sources.Example: Mr. Naeem received Rs. 20,000 as monthly rent from his tenant. As per rent agreement,
Rs. 2,000 is included in the amount of rent on account of electricity bill. Actual electricity bill paid by
Mr. Naeem for the year is Rs.8,000. Calculate his taxable income for the tax year 202 3.Solution:
Income from Property
Property income (assumed after expenses) (20,000 - 2,000) x 12 216,000Income from Other Sources
Amount received against electricity bills (Rs. 2,000 x 12) 24,000
Expenses