2.

Income from rent (section 35 -39):

Particulars
Reasonable Value: 2,880,000
Rental value 2,520,000
Add: TDS (If any) Higher of annual
Add: Owner's expenses paid by the value and actual
tenant rent a l va lue
Less: Tenant' s expenses paid by the
owner
Actual rental value 2,520,000
Annual Value 2,880,000

Add : Advance rent -

Any receipts or sum other than rental value or advance rent -
(105,000)
Less : Adjusted advance rent which received previous income year -
Vacancy allowance (105,000)
Annual Value 2,775,000
after adjustment

Less: Admissible expenses: (829,100)

1. Repair & maintenance expenses 693,750
[Collection charge, sewerage bill, [Admissible limit: Residential
salary of guard, liftmen, caretaker house: 25%, Commercial house: 30%
etc.] ]
Proportionate in case of Vacancy &
2. Land development tax 5,750
Personal Occupancy
Proportionate in case of Vacancy &
3. Insurance Premium 48,000
Personal Occupancy
4. Interest payable on house (deductable in equal 3 installments
60,000
building Loan in consecutive income years)
5. Annual tax (Municipal or local Proportionate in case of Vacancy &
21,600
authority tax] Personal Occupancy
Total Income 1,945,900
from Rent
35 Definition.—For the purposes of this chapter,
(1)
"House Property" shall include any house property, following assets along with building and houses shall also be included , namely:-

(a) furniture, fixtures, fittings which are an integral part of the said house; and
(b) the land on which the house situated:
Provided that it shall not include the following buildings or structures, namely:-
(i) any building used wholly as a warehouse, or
(ii) any factory premise for which rent is paid as an integral part of the rent of plant and machinery;
(2) "Rent" means the grant of the right to use property for a specified period without relinquishing ownership, whether owned or not, rent
to any other person by a scheduled bank, investment bank, development finance company or mudaraba or leasing company shall not be
included;
(3) "Property" means house property, land, furniture, fixtures, factory buildings, business premises, machinery, personal vehicles and any
other physical asset of a capital nature, which is rentable.
36 Income from Rent.—
(1) After deducting the total allowable expenses mentioned in this Chapter from the total rental value of any of a person, the remainder
shall be the rental income of that person from the said property.
(2) If any part of the property of person is used for the purpose of that person's own business or if the income derived therefrom is
Considered under the income from business of that person, this section shall not apply to that part.
(3) Irrespective of the nature of rent of any property other than hostel, hotel, motel or resort, regardless of the nature of business, trade or
business, the income earned from the said property shall be considered under the head, "Rental Income".
37 Computation of Total Rental Value -
(1) The total rental value of any house property owned by a person in any income year shall be Computed according to the following
formula, namely: a (b+c+d+e)-f, where—
a = total rental value,
b = whichever of the following amounts is higher, namely:-
(i) the amount of rent earned from the house property; or
(ii) annual value of house property;
c = so much of the adjustable rent received as advance against the rent of the house property which has been adjusted during that
income year.
Provided that, it shall not include any un-adjustable advance or security deposit,
 d = Any amount or value of any benefit other than the salami or premium received on account of the use of the said house property in
the said income year which is additional to the amount mentioned in b and c,
(e) any service charge, repair and maintenance charge or any other sum, whatever called, paid by the tenant of the house property; f
Vacancy allowance which will be admissible only if proved upon production of electricity bill.
(2) The total rental value of property other than house property shall be computed according to the following formula, namely:
a = (b+c+d), where—
a = total rental value,
b = whichever of the following amounts is higher, namely:
(i) the amount of rent earned from the property; or
(ii) the annual value of the property;

c = so much of the adjustable rent received as advance against the rent of the property which has been adjusted during that income year.

Provided that, it shall not include any un-adjustable advance or security deposit,
d = income derived from the use of the property in any other way and the value of any other figure or benefit derived from the property
which is in addition to the amounts mentioned in b and c.
38 Allowable Deductions in Computing Income from Rent. —
(1)
The following expenses shall be deductible in computing the income received from rent of house property owned by a person, namely:-

(a) the premium paid for any Insurance against the risk of loss or destruction of any house property;
(b) interest or profit paid on any capital loan taken from any bank or finance company for acquisition, construction, renovation or
reconstruction of house property;
(c) any tax, fee or other annual charge paid on the house property, which is not in the nature of a capital charge;
(d) Any interest or profit paid during the pre-rental period to any bank or finance company on any capital loan used for the acquisition,
construction, repair, reconstruction or new construction of the house property shall be charged in total 3 (three) equal installments in the
consecutive years from the relevant income year associated with commencement of the rent.
Provided that no interest or profit or any part thereof of the pre-rental period, if any, shall be deductible after the said period;
 (e) the sums mentioned in the table below for rent collection, water and sewerage, electricity, gas, service charges, repair and
maintenance charges and any other basic service charges, namely:-
Table
SI. Type of Property Statutory deduction (as a percentage of gross rental value)
1 House property used for commercial purposes 30% (thirty percent)
2 House property used for non-commercial purposes 25% (twenty five percent)

(f) in case of partial rent of house property, expenses shall be admissible at a proportionate rate against the partial rent;
(g) Where a house property is rented out for part of the income year, the expenditure shall be admissible at the rate proportionate to the
period during which the rent is paid.
(2) In computing income from rent of any property other than house Property, deductions shall be allowed subject to the following limits
and conditions, namely:-
(a) the deductions allowed under sections 49-55 in computing income from business subject to such limits and conditions;
(b) All deductions other than the allowances allowed under the Third Schedule are made by bank transfer.

39 Computation of Income from Special Rent-

(1) Any portion of any statutory deduction claimed as unexpended under clause (e) of subsection (l) of section 38 shall be deemed to be
income from special rent.
(2) Except in areas of accounting adjustments, deductions not permitted under sub-section (2) of section 38 shall be treated as income from
special rent.
(3) No deduction, adjustment of loss or set-off and no allowance under the Third Schedule shall be allowed against the income computed as
income from special rent and such income shall be taxed at the regular rate of tax.
109. Deduction of Tax at source from Rent.-
(1) Where a specified person-
(a) any house property;
(b) hotel or guest house;
(c) vacant premises or plant or machinery; or
(d) any reservoir other than a government reservoir,
In case of rent the said person shall deduct tax at the rate of 5% (five percent) on the rent payable while paying the rent of the said property.
(2) In cases where it is found after assessment of tax for the relevant year that no tax is payable by the owner of the house property or the
amount of tax paid is more than the tax payable, in that case the amount deducted shall be refunded at the rate stated below-
(a) if no tax is payable, the whole portion; or
(b) if the amount of tax deducted exceeds the amount of tax payable, whichever is excess.
(3) Where, on an application made in this behalf, the Deputy Commissioner of Taxes issues a certificate in good faith in the prescribed form to
the effect that the owner of the house property has no assessable income for the said year or is exempt from income-tax subject to the
provisions of this Act, provided under sub-section (1) the tax on the income received from the rent of the said house property shall not be
deductible until the certificate is cancelled.
(4) For the purposes of this section, 'Rent' means any payment, by whatever name it may be called, made by way of a lease, tenancy or any
contract or agreement for the use of any building including any furniture, fixtures and land.

Sec 267 (2) Where any such person having income from the rent of tangible property fails, without reasonable cause, to comply with the
provisions of sub-section (3) of section 72 or the provisions of any order or rule made for the purpose of that section, the Deputy
Commissioner of Taxes may impose on him penalty of 50% (fifty percent) of the tax payable from rental income of tangible asset or taka 5
(five) thousand, whichever is higher.