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ILLUSTRATION FOR GROSS ANNUAL VALUE |
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ILLUSTRATION: IF THE PROPERTY IS LET OUT THROUGHOUT THE PREVIOUS YEAR WITHOUT SUFFERING ANY LOSS ON ACCOUNT OF UNREALIZED RENT & PROPERTY REMAINING VACANT. (Rs. in Thousands)
* Assume none of the properties suffer loss on account of unrealized rent. Solution Computation of Gross Annual Value (GAV) (Rs. in Thousands)
NOTE:
Case II
IF THE PROPERTY IS LET OUT THROUGHOUT THE PREVIOUS YEAR ALONG WITH LOSS BEING SUFFERED ON ACCOUNT OF UNREALIZED RENT. (Rs. in Thousands)
Solution Computation of Gross Annual Value (GAV) (Rs. in Thousands)
NOTE:
Deduction for
Unrealized rent is allowable only on satisfaction of the following conditions:
Tenancy is bonafide; Defaulting tenant has vacated/ adequate steps have been taken to vacate him; Such tenant is not in occupation of any other property of the assessee; Adequate legal steps have been taken to recover such unrealized rent. Case III IF THE PROPERTY IS LET OUT THROUGHOUT THE PREVIOUS YEAR WITHOUT ANY LOSS ON ACCOUNT OF
UNREALIZED RENT BUT PROPERTY REMAINS VACANT FOR A PART OF THE YEAR. (Rs. in Thousands) Particulars PROPERTY A B C D E Municipal Value (1) 160 160 160 160 160 Fair Rent (2) 175 200 170 150 195 Standard Rent under the Rent
Control Act (3) 165 190 180 180 185 Rent per month (4) 12 15 17 16 14 Actual Rent Receivable
(5) = (4) × (12 months) 144 180 204 192 168 Unrealized
Rent (6) Nil Nil Nil Nil Nil No. of months property
remains vacant (7) 1 1.5 3 4 12 Annual Vacancy Loss suffered
(8) = (7) × (4) 12 22.5 51 64 168 Actual Rent Received (8) =
(5) - (6) - (8) 132 157.5 153 128 0 Solution Computation of Gross Annual Value (GAV) (Rs. in Thousands) Particulars PROPERTY A B C D E Computation
I: Reasonable
Expected Rent, i.e.,(1) or (2) whichever is higher subject to limit
of (3) 165 190 170 160 185 Computation
II: Actual Rent received after deduction
of unrealized rent or vacancy loss (8) NA1 NA2 NA3 NA4 NA Computation
III: Applicable only where Computation II
is not applicable 153 167.5 153 128 NIL5 Therefore,
Gross Annual Value (GAV) equals Higher of Computation I or II. 153 167.5 153 128 NIL NOTES:
In any case either Computation II or Computation III will be applicable; both cannot be applied at the same time. NA1: In this case Actual Rent received is less than the Rent under Computation I because of two factors which can be categorized as under:
LOSS DUE TO
VACANCY: Such loss amounting to Rs. 12,000 as shown above under (8) above OTHER
FACTORS: The Annual Rent receivable towards property A (144) is itself lower than the Rent shown under Computation I (165), if vacancy loss was not there, in which case Situation III becomes applicable and GAV is calculated as Computation I less Vacancy Loss, i.e., (165 - 12 = 153) NA2: In this case Actual Rent received is less than the Rent under Computation I because of two factors which can be categorized as under:
LOSS DUE TO VACANCY: Such loss amounting to Rs. 22,500 as shown above under (8) above OTHER FACTORS: The Annual Rent receivable towards property B (180) is itself lower than the Rent shown under Computation I (190), if vacancy loss was not there, in which case Situation III becomes applicable and GAV is calculated as Computation I
less Vacancy Loss, i.e., (190 - 22.5 = 167.5)
NA3: In this case Actual Rent received is less than the Rent under Computation I because of only one factor namely:
LOSS ONLY DUE TO VACANCY: Since Actual Rent received is less than Computation I figure (170) only because of Loss on account of property remaining vacant (51) and not because of any other factor, Situation II becomes applicable and Actual Rent (153) equals
GAV.
LOSS ONLY DUE TO VACANCY: Since Actual Rent received is less than Computation I (160) figures only because of Loss on account of property remaining vacant (64) and not because of any other factor, Situation II becomes applicable and Actual Rent (128) equals GAV.
NIL5: In this case Actual Rent received is NIL because of property remaining vacant throughout the year and hence GAV will also become NIL. Case IV IF THE PROPERTY IS LET OUT THROUGHOUT THE PREVIOUS YEAR WITH LOSS BEING SUFFERED ON ACCOUNT OF
UNREALIZED RENT AND LOW ANNUAL RENT (NO VACANCY LOSS INCURRED) (Rs. in Thousands) Particulars PROPERTY A B C D E Municipal Value (1) 160 160 160 160 160 Fair Rent (2) 175 200 170 150 195 Standard Rent under the Rent
Control Act (3) 165 190 180 180 185 Rent per month (4) 11 12 15 14 13 Actual Rent Receivable
(5) = (4) × (12 months) 132 144 180 168 156 Unrealized
Rent (6) 22 12 22.5 16 26 Annual Vacancy Loss (7) Nil Nil Nil Nil Nil Actual Rent Received (8) =
(5) - (6) - (7) 110 132 157.5 152 130 Solution Computation of Gross Annual Value (GAV) (Rs. in Thousands) Particulars PROPERTY A B C D E Computation
I: Reasonable
Expected Rent, i.e.,(1) or (2) whichever is higher subject to limit
of (3) 165 190 170 160 185 Computation
II: Actual Rent received after deduction
of unrealized rent or vacancy loss (8) NA1 NA2 NA3 NA4 NA5 Computation
III: Applicable only where Computation II
is not applicable NA1 NA2 NA3 NA4 NA5 Therefore,
Gross Annual Value (GAV) equals Higher of Computation I or II. 165 190 170 160 185 NOTES:
In this case neither Computation II nor Computation III will be applicable; instead figures arrived at under Computation I will directly be taken as GAV as explained in Situation IV.
NA1
to NA5
In all the cases Actual Rent received is less than the Rent under Computation I, hence Computation II becomes less than Computation I for all house properties; Computation III will not apply in any case is no loss from on Account of Vacancy;
Hence as per Situation I ruling read with Situation IV ruling higher of the Computation I or Computation II will be taken as GAV and hence the treatment is done accordingly.
Deduction for Unrealized rent is allowable only on satisfaction of the following conditions:
Tenancy is bonafide; Defaulting tenant has vacated/ adequate steps have been taken to vacate him; Such tenant is not in occupation of any other property of the assessee; Adequate legal steps have been taken to recover such unrealized rent. |
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