Topic wise Test Papers of CA Inter - Direct Tax – MAY/NOV-24 Exams

Topic: House Property

Total Marks: 39 Marks

Time Allowed: 75 minute

Questions:

Part-A Multiple Choice Questions

[Total 14 Marks]
1. Vidya received ` 90,000 in May, 2023 towards recovery of unrealised rent, which was deducted from
actual rent during the P.Y. 2021-22 for determining annual value. Legal expense incurred in relation to
unrealized rent is ` 20,000. The amount taxable under section 25A for A.Y. 2024-25 would be -
(a) ` 70,000
(b) ` 63,000
(c) ` 90,000
(d) ` 49,000 [2 Marks]
2. Ganesh and Rajesh are co-owners of a self-occupied property. They own 50% share each. The interest
paid by each co-owner during the previous year 2023-24 on loan (taken for acquisition of property during
the year 2004) is ` 2,05,000. The amount of allowable deduction in respect of each co-owner is –
(a) ` 2,05,000
(b) ` 1,02,500
(c) ` 2,00,000
(d) ` 1,00,000 [2 Marks]
3. Ram Builders & Developers is the sole-proprietorship concern of Mr. Ram. The main business of the
concern is construction, development and sale of residential and commercial units. Ram Builders &
Developers developed a project named Luxuria Heaven, which has both residential and commercial units
with its own funds. It obtained certificate of completion for the said project with effect from 31/03/2023.
Ram sold majority of its residential units and commercial units in the F.Y.2023-24. However, around 30
residential units and 15 commercial units were held by him as stock in trade as on 31.3.2024. During this
period, there was a slump in the real estate sector. In order to earn some income from these units, Ram
incidentally let out some of the units held as stock-in-trade. The details of units constructed, sold and
held as stock-in-trade are given hereunder:
Particulars Total Units Units Units held Units let Units vacant Actual rent per
construc- sold as stock- out during during the unit per month
ted in-trade as P.Y. 2023- whole of P.Y. [in respect of let
on 24 out of 2023-24 out units
31.3.2024 (4) [(4) – (5)] mentioned in
[(2) – (3)] (5)]

(1) (2) (3) (4) (5) (6) (7)

Residential 100 70 30 10 20 10,000 pm.
Units

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2 Test Papers of CA Inter - Direct Tax - MAY/NOV-24 Exams — Questions
Commercial 40 25 15 5 10 18,000 pm.
Units
140 95 45 15 30
Based on the facts of the case scenario given above, choose the most appropriate answer to the following
questions:
(i) While computing the total income of Mr. Ram, the income from residential and commercial units
let out during the P.Y.2023-24 will be taxed under head:
(a) Income from house property
(b) Profits and gains of business or profession
(c) Income from let out residential units will be taxed under the head “Income from house
property” and income from let out commercial units will be taxed under the head “Profits
and gains of business or profession”
(d) Income from other source [2 Marks]
(ii) What would be the tax treatment of vacant residential and commercial units held as stock in trade
as on 31.3.2024?
(a) The vacant residential units would be deemed to be let out and expected rent would be
deemed as the annual value chargeable to tax under the head “Income from house property”
for A.Y. 2024-25.
(b) The vacant units, both residential and commercial, would be deemed to be let out and
expected rent would be deemed as the annual value chargeable to tax under the head “Income
from house property” for A.Y. 2024-25.
(c) The annual value of both vacant residential and commercial units would be Nil for A.Y.2024-
25. Hence, no income is chargeable for such units under the head “Income from house
property” for A.Y. 2024-25.
(d) Vacant units held as stock-in-trade can never be deemed as let out at any point of time
[2 Marks]

4. Mr. Raghav has three houses for self-occupation. What would be the tax treatment for A.Y.2024-25 in
respect of income from house property?
(a) One house, at the option of Mr. Raghav, would be treated as self-occupied. The other two houses
would be deemed to be let out.
(b) Two houses, at the option of Mr. Raghav, would be treated as self-occupied. The other house would
be deemed to be let out.
(c) One house, at the option of Assessing Officer, would be treated as self-occupied. The other two houses
would be deemed to be let out.
(d) Two houses, at the option of Assessing Officer, would be treated as self-occupied. The other house
would be deemed to be let out. [2 Marks]
5. Mr. P has a house property in Delhi whose Municipal value is `1,00,000 and the Fair Rental Value is
`1,20,000. The standard rent is fixed at `1,08,000. It was self-occupied by Mr. P from 01.04.2023 to
31.07.2023. With effect from 01.08.2023, it was let out at ` 10,000 per month. Compute the net annual
value of the house property for A.Y. 2024-25 if the municipal taxes paid by him during the year were `
20,000.
(a) `1,00,000
(b) ` 88,000
(c) ` 60,000
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 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions 3
(d) `1,08,000 [2 Marks]
6. Mr. Agarwal moved to Mumbai. He took a property on rent for his residential purpose. However, the
property was not fully occupied by him. He let out the property to his friend at `15,000 p.m. from
01.04.2023 to 31.03.2024. Mr. Agarwal is of the view that income from subletting of property is taxable
as Income from House Property. As tax advisor of Mr. Agarwal, find out whether his view is correct?
(a) Correct, as any income from a house property is taxable under the head Income from House
Property.
(b) Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from subletting
shall be taxable under the head Profits and Gains of Business or Profession.
(c) Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from subletting
shall be taxable under the head Income from other sources.
(d) Correct, as income from subletting of a property is directly attributable to the property itself and
hence, chargeable to tax as income from house property. [2 Marks]

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4 Test Papers of CA Inter - Direct Tax - MAY/NOV-24 Exams — Questions
Part-B Descriptive Questions

Question: 1
Mr. Ram and Lakhan constructed their houses on a piece of land purchased by them at New
Delhi. The built-up area of each house was 1,000 sq. ft. ground floor and an equal area in the first
floor. Ram started construction on 1-04-2022 and completed on 1-04-2023. Lakhan started the
construction on 1-04-2022 and completed the construction on 30-06-2023. Ram occupied the
entire house on 01-04-2023. Lakhan occupied the ground floor on 01-07-2023 and let out the
first floor for a rent of ` 15,000 per month. However, the tenant vacated the house on 31-12-
2023 and Lakhan occupied the entire house during the period 01-01-2024 to 31-03-2024.
Following are the other information:

(1) Fair rental value of each unit (ground floor/first floor) ` 1,00,000 per year
(2) Municipal value of each unit (ground floor/first floor) ` 72,000 per year

(3) Municipal taxes paid by Ram ` 8,000

Lakhan ` 8,000
(4) Repair and maintenance charges paid by Ram ` 28,000
Lakhan ` 30,000
Ram has availed a housing loan of ` 20 lakhs @ 12% p.a. on 01-04-2022. Lakhan has availed a
housing loan of ` 12 lakhs @ 10% p.a. on 01-07-2022. No repayment was made by either of them
till 31-03-2024. Compute income from house property for Ram and Lakhan for the previous year
2023-24. [10 Marks]

Question: 2
Mr. Ajnabi has a house property in Cochin. The house property has two equal dimension
residential units. Unit 1 is self-occupied throughout the year and unit 2 is let out for 9 months
for ₹ 10,000 p.m. and for remaining 3 months it was self-occupied. Compute his taxable income
from the following details:
Municipal value ₹ 2,00,000, Fair Rent ₹ 1,60,000, Standard rent ₹ 3,00,000, Municipal tax 10%
(60% paid by assessee), Interest on loan ₹ 40,000, Expenditure on repairs ₹ 20,000.
[5 Marks]
Question: 3
Mr. Abul Hasan owns three houses at Ranchi. He furnishes the following particulars for the PY
2023-24:

House No. I: The house was constructed in 2022 and let out to a friend at a monthly rent of ₹
10,000 upto 31.1.2024 and thereafter, it was let out at its fair rent of ₹ 15,000 per month. He has
paid ₹ 15,000 as municipal taxes @ 10% of Municipal Value. He has also paid fire insurance
premium of ₹ 2,000.

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 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions 5
House No. II: Ground floor is let out @ ₹ 20,000 p.m. first floor, identical to ground floor, is
occupied by him for his residence. Municipal taxes paid @ 20% amounted to ₹ 80,000.

House No. III: The house was constructed in 2011 and is used for his business. The annual value
of this house is ₹ 1,00,000 and he spent ₹ 5,000 as municipal taxes and ₹ 2,000 for repairs.

Other information:
A loan of ₹ 40,00,000 has been taken on 01-6-2021 for construction of House No. II. Construction
of the house was completed on 01-6-2022. He repaid the entire loan on 31-12-2023. Interest on
loan is payable @ 12% p.a. Compute his income from house property for the A.Y. 2024-25.
[10 Marks]

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