Taxpublishers.in - Monday Corner Answer to the Quiz for the week (12 Feb 2024)

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Quiz for the week (12 Feb 2024): Elango engaged in hotel business at Chennai. He has loss from hotel business of Rs.4,10,000 and loss under let out property of Rs.1,20,000 for the assessment year 2022-23. He had filed his ITR for assessment year 2022-23 within time. He did not do any business during financial year 2022-23 and therefore did not file ITR for assessment year 2023-24. He has loss from let out house property of Rs.2,20,000 for the financial year 2022-23. Assume he has business income (computed) Rs.9,40,000 and let out property loss of Rs. 1,80,000 for the financial year 2023-24. He is covered by section 115BAC for all the assessment years. Determine his total income for the assessment year 2024-25 with reasons to support your working. Best Answer : The above query says that the assessee is covered by section 115BAC for the assessment years 2022-23 and 2023-24. The opinion is to be given for the assessment year 2024-25 for which also, he wants to remain in new regime i.e section 115 BAC. Section 115BAC(2)(i) says for the purpose of computing the total income no deduction is allowable under section 24(b) in respect of property referred to in section 23(2). Section 23(2) says where the house property is in the occupation of the owner for his own residence or cannot be occupied by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value shall be taken to be `nil’. Thus, in respect of self-occupied property, no deduction under section 24(b) is allowable. It is pertinent to note that section 24(b) deals with interest on moneys borrowed. Therefore, the interest on moneys borrowed of the financial years 2021-22 and 2022-23 (assessment years 2022-23 and 2023-24) shall not be eligible for deduction. Clause (ii) of section 115BAC(2) says that the total income shall be computed without set off of any loss (a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); (b) under the head “Income from house property” with any other head of income. Clause (i) of sub-section (2) of section 115BAC deals with self-occupied property and not let out property. Therefore, interest on moneys borrowed is not covered by clause (i). However, clause (ii) says without set off of any loss under the head "Income from house property" with any other head of income. Thus, the loss under the head ‘house property’ is not eligible for set off with any other head of income. The income of the financial year 2023-24 (asst.year 2024-25) being Rs.9,40,000 is liable to tax since the assessee opts to continue under section 115BAC for the assessment year 2024-25. Jeetendra Parvanee, Gujarat

Quiz for the week (12 Feb 2024):

Elango engaged in hotel business at Chennai. He has loss from hotel business of Rs.4,10,000 and loss under let out property of Rs.1,20,000 for the assessment year 2022-23. He had filed his ITR for assessment year 2022-23 within time. He did not do any business during financial year 2022-23 and therefore did not file ITR for assessment year 2023-24. He has loss from let out house property of Rs.2,20,000 for the financial year 2022-23.

Assume he has business income (computed) Rs.9,40,000 and let out property loss of Rs. 1,80,000 for the financial year 2023-24. He is covered by section 115BAC for all the assessment years. Determine his total income for the assessment year 2024-25 with reasons to support your working.

Best Answer :

The above query says that the assessee is covered by section 115BAC for the assessment years 2022-23 and 2023-24. The opinion is to be given for the assessment year 2024-25 for which also, he wants to remain in new regime i.e section 115 BAC.

Section 115BAC(2)(i) says for the purpose of computing the total income no deduction is allowable under section 24(b) in respect of property referred to in section 23(2).

Section 23(2) says where the house property is in the occupation of the owner for his own residence or cannot be occupied by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value shall be taken to be `nil’. Thus, in respect of self-occupied property, no deduction under section 24(b) is allowable. It is pertinent to note that section 24(b) deals with interest on moneys borrowed. Therefore, the interest on moneys borrowed of the financial years 2021-22 and 2022-23 (assessment years 2022-23 and 2023-24) shall not be eligible for deduction.

Clause (ii) of section 115BAC(2) says that the total income shall be computed without set off of any loss (a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); (b) under the head “Income from house property” with any other head of income.

Clause (i) of sub-section (2) of section 115BAC deals with self-occupied property and not let out property. Therefore, interest on moneys borrowed is not covered by clause (i). However, clause (ii) says without set off of any loss under the head "Income from house property" with any other head of income.

Thus, the loss under the head ‘house property’ is not eligible for set off with any other head of income. The income of the financial year 2023-24 (asst.year 2024-25) being Rs.9,40,000 is liable to tax since the assessee opts to continue under section 115BAC for the assessment year 2024-25.

Jeetendra Parvanee,
Gujarat