Question 1 (c)
Total income with a house-property loss limited to ₹2,00,000 and the balance carried forward (as set, 1961 Act, AY 2022-23)
5 marks
- Time to write
- About 10 minutes
From an older CBCS paper
Question
Question 1 (c) · 5 marksAttempt any three questions from the 6 questions given below:
- Using the following information, compute the Total Income of X and the loss to e carried forward for the Asessment Year 2022-23:
| Particulars of Income | Rs. |
|---|---|
| Salary (after the standard deduction) | 24,00,000 |
| Other Sources, as given | 2,00,000 |
| House Property I (that is let-out) | |
| House Property II (that is self-occupied) | 4,00,000 |
| (-) 6,50,000 |
Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2022-23 (previous year 2021-22), with the dates as printed. Q1 is "any three of six" (15 marks); this slot is item (3). "to e carried forward" and "Asessment" stand as printed. As printed, the English table is misaligned: the row for House Property I (let-out) has no amount, House Property II (self-occupied) carries 4,00,000 and a third row without a label carries (-) 6,50,000. The Hindi twin reads House Property I (let-out) 4,00,000 and House Property II (self-occupied) (-) 6,50,000; the answer states which reading it takes (recorded here, not settled).
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- any threeThe paper asks for any 3, and this is one of them. Only 3 are marked: a fourth earns nothing.
- computeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Reading of the table; set-off within the head 1½ marks 2 min
- 2 Limit on set-off against other heads 1½ marks 2 min
- 3 Total income 1 mark 2 min
- 4 Carry forward under section 71B 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
- The table. The English table is misaligned in print. It is read as the Hindi twin prints it: House Property I (let out) shows income of ₹4,00,000 and House Property II (self-occupied) a loss of ₹6,50,000. A self-occupied house cannot show income (its annual value is nil, section 23(2)), so the English alignment cannot be meant.
- The loss. The loss of ₹6,50,000 is taken as the loss computed under the head, as the question gives it and as its request for a loss to be carried forward assumes.
- Regime. The normal provisions apply (X has not opted for section 115BAC; Finance Act, 2020, section 53). An individual with no business or professional income exercises that option, in the prescribed manner, with his section 139(1) return for the year (section 115BAC(5)(ii)). The result under section 115BAC is given at the end.
The loss of one house is first set off against the income of the other house under the same head (section 70(1)):
| House property | ₹ |
|---|---|
| House Property I (let out) | 4,00,000 |
| House Property II (self-occupied) | (6,50,000) |
| Net loss under the head Income from house property | (2,50,000) |
A loss under the head Income from house property can be set off against income under any other head (section 71(1)), but not beyond ₹2,00,000 in an assessment year (section 71(3A)). So ₹2,00,000 is set off against the salary, and the other ₹50,000 cannot be set off this year.
| Particulars | ₹ |
|---|---|
| Income under the head Salaries (after the standard deduction) | 24,00,000 |
| Income from other sources | 2,00,000 |
| Income before the set-off | 26,00,000 |
| Less: loss from house property set off (limited by section 71(3A)) | 2,00,000 |
| Gross total income = total income, assessment year 2022-23 | 24,00,000 |
The ₹50,000 not set off is carried forward (section 71B). It can be set off only against income from house property, in any of the eight assessment years that follow (2023-24 to 2030-31). A loss under this head may be carried forward even if the return is filed late, because section 80 does not cover section 71B.
If the facts are read otherwise
- The ₹6,50,000 as the interest on the loan before the limit. For a self-occupied house the interest allowed is ₹30,000 at most (first proviso to section 24(b)), raised to ₹2,00,000 only where the house was acquired or constructed with capital borrowed on or after 1 April 1999, the acquisition or construction was completed within five years from the end of the financial year of borrowing, and the lender's certificate of the interest payable is furnished (second and third provisos). Taking those conditions as met, the allowance is ₹2,00,000. The loss of House II is then ₹2,00,000, the head shows income of ₹2,00,000, total income is ₹28,00,000 and there is nothing to carry forward.
- Under section 115BAC. The standard deduction under section 16 is not allowed, so the ₹50,000 goes back and the salary is ₹24,50,000. No interest is allowed on a self-occupied house and no house-property loss is set off against another head (section 115BAC(2)(i) and (ii)(b), Finance Act, 2020, section 53); House II shows nil, the head shows ₹4,00,000, total income is ₹30,50,000, and nothing is carried forward.
Where the 5 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Reading of the table; set-off within the head | 1.5 |
| 2 | Limit of ₹2,00,000 on set-off against other heads | 1.5 |
| 3 | Total income | 1 |
| 4 | Carry forward of ₹50,000 under section 71B | 1 |
| Total | 5 |
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