Section 24(a)

Section 24(a) — the law in short

What the courts have decided on section 24(a), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Oberoi Building & Investment (P) Ltd v CIT-II, Kolkata High CourtHelps taxpayerNo later treatment found
  I hold shop space under a fifty-year leave and licence and sub-licence it with services. The Assessing Officer says the fifty-year term makes me a deemed owner under section 27(iiib) and taxes the receipts as house property income. How do I answer that?
  The Calcutta High Court allowed the assessee's appeal and answered both substantial questions in its favour, holding that the income from sub-licensing was business income and not income from house property. The Court reached that conclusion on the objects and the actual activity of the company, and held that the Tribunal had committed a manifest error of law in ignoring the company's objects and business activity and in misunderstanding the nature of a sub-licence transaction.
• Jay Metal Industries Pvt. Ltd. v CIT High CourtCuts both ways
  I let a fully furnished, centrally air-conditioned office with a generator on a single lease and claimed the thirty per cent standard deduction under s.24(a). The Assessing Officer has taxed the whole rent as income from other sources. Can I still get some deduction?
  The Delhi High Court held that the lease was composite, that the rent answered the description in s.56(2)(iii), and that the standard deduction under s.24(a) was therefore not available. But it did not leave the assessee with nothing: it directed that while giving appeal effect the Assessing Officer grant the benefit of s.57 — recorded in the judgment as s.57(iii) — in respect of the deduction corresponding to the letting, the Revenue not having disputed that the assessee had never claimed depreciation.
• Commissioner of Income Tax v M/s. Sane & Doshi Enterprises High CourtHelps taxpayer
  I am a builder and I let out the flats I could not sell, which sit in my books as closing stock. Is that rent business income, and can I claim the section 24 deductions including interest on the money that built them?
  It is house property income, and yes. The Bombay High Court dismissed the Revenue's appeals and upheld the finding that rent from unsold units of a commercial complex was assessable under the head income from house property with the section 24(a) deduction. It held that the character and nature of the income is decisive, not the treatment the assessee gives it in its books, so a consolidated profit and loss account did not convert the receipt into business income. It also upheld the provision of Rs 45 lakhs for incomplete work under the project completion method, and the deduction under section 24(b) of interest paid on partners' capital, where that capital had gone into constructing the premises that were let.
• Arihant Developers v ACIT ITATHelps departmentNo later treatment found
  I build godowns, hold them as stock in trade and let them out. I have offered the rent as house property income and taken the thirty per cent under section 24(a). The Assessing Officer has recast it as business income. Can he do that when I am the owner and the rent is plainly rent?
  On these facts yes, and the Tribunal dismissed all four appeals. Where a firm constructs godowns and lets them out in an organised manner as its only activity, the receipts are business income under section 28 and not annual value under section 22, so the section 24(a) deduction is not available. The Tribunal expressly declined to apply CIT v Ansal Housing Finance & Leasing Co. Ltd., holding it to be about notional annual letting value on unsold flats and not about a business of letting warehouses.
• Shamdarshan Properties Pvt Ltd v DCIT ITATHelps taxpayerHigh Courts differ
  The officer has added notional annual letting value on my builder-client's unsold flats for AY 2012-13. Section 23(5) did not exist then. Can he do that?
  No, on the Mumbai Tribunal's view. Section 23(5) was inserted by the Finance Act 2017 with effect from AY 2018-19; for earlier years there was no provision bringing the notional annual value of unsold flats held as stock-in-trade to tax under section 22, and flats carried as stock generate business income when they are sold, not house property income while they lie unsold.
• ACIT, Central Circle-26 v Ashok Kumar ITATHelps taxpayerNo later treatment found
  I do not own the property. I hold it on a lease running since 1989 and I sub-let it. The Assessing Officer says sub-letting income is income from other sources under section 56 and has denied me the thirty per cent under section 24(a). What is the answer?
  The Commissioner (Appeals) held, and the Tribunal proceeded on the footing, that where the lease is for a term of not less than twelve years section 27(iiib) read with section 269UA(f) makes the lessee the deemed owner of the property for sections 22 to 26, so that the sub-letting receipt is income from house property and the section 24(a) deduction follows; the Tribunal recorded that conclusion in its own words at paragraph 19 without separately construing the section. The Tribunal held that the Revenue, having assessed the rent under the house property head, could not deny the statutory deduction unless it was proved on record that the original owner had also claimed the benefit, and the Revenue's appeal was dismissed.
• Kohinoor Industrial Premises Co-operative Society Ltd v ITO ITATHelps taxpayer
  My society lets space on the terrace to cellular operators for their towers and antennae. The Assessing Officer says that is income from other sources and has disallowed the thirty per cent under section 24(a). Is he right?
  No, on these facts. The Tribunal held that the terrace is part of the house property, that letting space on it for installing and operating a mobile tower or antenna is letting a part of the house property itself, and that the receipt is therefore income from house property on which the section 24(a) deduction is allowable.
• Statutory position — s.25A: arrears of rent and unrealised rent are charged in the year you receive them, thirty per cent comes off, and it makes no difference that you no longer own the property CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  A tenant who stopped paying years ago has finally paid up, and I sold the flat in between. The officer wants to tax the whole amount now. Which year is it taxable in, do I get any deduction, and does it matter that the property is not mine any more?
  Section 25A charges arrears of rent and unrealised rent in the financial year you actually receive or realise them, and it says in terms that it does not matter whether you own the property in that year. Sub-section (2) allows a flat thirty per cent of the amount as a deduction, and that is the only deduction the section gives. The section you are reading is not the old one: with effect from 1 April 2017 a single section 25A was substituted for the three provisions that used to do this work — the old section 25A, section 25AA and section 25B — and the substitution is what first gave unrealised rent the thirty per cent, which section 25AA had never allowed. It joins up with section 23: the Explanation to section 23(1) keeps rent the owner cannot realise out of the annual value when it falls due, and section 25A brings it back when the money comes in, so the earlier year is never reopened. Section 25A governs an amount received or realised up to 31 March 2026; for an amount received on or after 1 April 2026 the provision is section 23 of the Income-tax Act, 2025.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.