**(B) Unit Test -- I** **Q.1)** Mr. Sachin has given house property on rent. The particulars of the house for the P.Y. 2025-26 are as under: | Particulars | | | :--- | :--- | | Municipal valuation p.a. | Rs. 1,50,0001{,}50{,}000 | | Fair rent p.a. | Rs. 1,75,0001{,}75{,}000 | | Standard rent p.a. | Rs. 1,60,0001{,}60{,}000 | | Actual Rent Received Per month | Rs. 15,00015{,}000 | | Unrealised Rent for | 1 month1\text{ month} | | Municipal taxes paid during the year by assessee | 10%10\% | | Interest on money borrowed for repair of property during the current year | 55,00055{,}000 | Compute Mr. Sachin's income from house property for A.Y. 2026-27. --- **Q.2)** Mr. X owns a house property. From the particulars given below compute his income from house property for the A.Y. 2026-27: | Particulars | | | :--- | :--- | | Municipal valuation p.a. | Rs. 1,00,0001{,}00{,}000 | | Fair rent p.a. | Rs. 1,26,0001{,}26{,}000 | | Standard rent p.a. | Rs. 1,20,0001{,}20{,}000 | | Actual Rent Received per month | Rs. 11,50011{,}500 | | Municipal taxes paid during the year | 15% of Municipal Value15\%\text{ of Municipal Value} | | Expenses on repairs | Rs. 10,00010{,}000 | | Insurance Premium | Rs. 2,5002{,}500 | | Interest on loan for construction of house (construction completed on 31/03/2025) | Rs. 50,00050{,}000 |

Answer: Income from House Property for A.Y. 2026-27: 1. Mr. Sachin (Q.1): Rs. 50,000 2. Mr. X (Q.2): Rs. 36,100

Step-by-step solution

Step 1: Compute Gross Annual Value (GAV) for Mr. Sachin (Q.1)

Expected Rent (ER) is the higher of Municipal Valuation of 150000150000 and Fair Rent of 175000175000, restricted to Standard Rent of 160000160000, giving ER=160000\text{ER} = 160000. The actual rent received or receivable for the period let out minus unrealised rent (12−1=1112 - 1 = 11 months) is 15000×11=16500015000 \times 11 = 165000. Since actual rent exceeds expected rent, the Gross Annual Value (GAV) is 165000165000.

Step 2: Compute Net Annual Value and Income from House Property for Mr. Sachin (Q.1)

Municipal taxes paid are 10%10\% of 150000150000, which equals 1500015000. Net Annual Value (NAV) is GAV−Municipal Taxes=165000−15000=150000\text{GAV} - \text{Municipal Taxes} = 165000 - 15000 = 150000. Deductions under section 2424 are: standard deduction of 30%30\% of NAV (4500045000) and interest on borrowed capital of 5500055000. Thus, income from house property is 150000−45000−55000=50000150000 - 45000 - 55000 = 50000. Note that for a let-out property, there is no upper limit on interest deduction.

Step 3: Compute Gross Annual Value (GAV) for Mr. X (Q.2)

For Mr. X, the higher of Municipal Value of 100000100000 and Fair Rent of 126000126000 is 126000126000. Subject to Standard Rent of 120000120000, Expected Rent (ER) is 120000120000. The actual rent received for 1212 months is 11500×12=13800011500 \times 12 = 138000. Since actual rent exceeds expected rent, GAV is 138000138000.

Step 4: Compute Net Annual Value and Income from House Property for Mr. X (Q.2)

Municipal taxes paid are 15%15\% of 100000=15000100000 = 15000, so NAV is 138000−15000=123000138000 - 15000 = 123000. Deductions under section 2424 are: standard deduction under section 24(a)24(a) at 30%30\% of NAV (3690036900) and interest on loan for construction under section 24(b)24(b) of 5000050000. Other expenses such as repairs (1000010000) and insurance premium (25002500) are not separately deductible as they are covered by the standard deduction. Total income is 123000−36900−50000=36100123000 - 36900 - 50000 = 36100.

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