Taxation - Income TaxSubjectiveQuestion 6085 of 146
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Question 3 (a) Mr. Sandeep, manager in CTL Pvt. Ltd. at Mumbai, furnishes following information for the year ended 31st March, 2025: Basic salary is ₹ 55,000 per month and entitled to a commission of ₹ 2,500 per month. A company owned accommodation is provided to him in Mumbai. Furniture costing ₹ 2,40,000 was also provided. He took a personal loan of ₹ 3,00,000 on 1st September, 2024 on which the interest @7.75% per annum was charged by the company. The entire loan is still outstanding. SBI rate of interest on 1" April, 2024 is 12.75%. Mr. Sandeep is the owner of a house property in Kolkata which he constructed during the financial year 2016-17. The property consists of four identical units. He occupied one unit for his residence and three units were let out at a rent of ₹ 20,000 per month per unit. The municipal value is₹ 9,00,000 and the municipal tax was paid @ 20% of municipal value. Fair rent and standard rent are ₹ 7,50,000 and ₹ 8,50,000, respectively. One of the let out units was vacant for six months during the year. Interest on loan taken for construction of the house is ₹ 2,00,000. Compute total income of Mr. Sandeep for the A.Y. 2025-26 assuming he has opted out default tax regime u/s 115BAC(1A). (6 Marks) (b) Discuss the taxability with reason in the hands of recipient for the assessment year 2025-26 in respect of following receipts or income: (i) Mr. Ram received a sum of ₹ 5,00,000 from his father on Ram's wedding anniversary. (ii) Mr. Govind sold his house property to Mrs. Radha for ₹ 1,25,00,000, whereas value determined by stamp valuation authority was ₹ 1,75,00,000. (iii) Ms. Agastha got a gift of car worth ₹ 7,00,000 from her friend on her wedding anniversary. (4 Marks)

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Detailed Solution & Explanation

(a) Computation of total income of Mr. Sandeep for A.Y. 2025-26 as per the optional tax regime Particulars ` ` ` I Income from Salaries Basic Salary [₹ 55,000 x 12] 6,60,000 Commission [₹ 2,500 x 12] 30,000 Value of Rent-free accommodation 10% of salary [₹ 6,60,000 + ₹ 30,000] 69,000 Add: Value of furniture [₹ 2,40,000 × 10% p.a.] 24,000 93,000 TAXATION Value of perquisite for interest on personal loan Interest on loan as per SBI rate [₹ 3,00,000 x 12.75% x 7/12] 22,312.50 Less: Interest charged by the company [₹ 3,00,000 x 7.75% x 7/12] 13,562.50 8,750 Gross Salary 7,91,750 Less: Standard deduction u/s 16 [Actual salary or ₹ 50,000, whichever is less] 50,000 Net salary 7,41,750 II Income from house property Let out portion [three units] Municipal value [₹ 9,00,000 x ¾] 6,75,000 Fair Rent [₹ 7,50,000 x ¾] 5,62,500 Higher of Municipal value or fair rent 6,75,000 Standard Rent [₹ 8,50,000 x ¾] 6,37,500 Expected Rent [Higher of Municipal value or fair rent but restricted to standard rent] 6,37,500 Actual rent received/ receivable [₹ 20,000 x 12 x 3 – ₹ 20,000 x 6] 6,00,000 Actual rent of ₹ 6,00,000 is lower than the expected rent of ₹ 6,37,500 owing to vacancy since, had the property not been vacant the actual rent would have been ₹ 7,20,000. Therefore, the actual rent is Gross Annual Value. Gross Annual Value 6,00,000 Less: Municipal taxes (₹ 6,75,000 x 20%) 1,35,000 Net Annual Value 4,65,000 Less: Deduction under section 24 - 30% of net annual value 1,39,500 - Interest on loan [₹ 2,00,000 x ¾] 1,50,000 2,89,500 1,75,500 Self-occupied portion [One Unit] Annual Value Nil Less: Deduction u/s 24 Interest on loan for construction [₹ 2,00,000 x ¼] 50,000 (50,000) 1,25,500 Gross Total Income/ Total Income 8,67,250 (b) Taxable/ Non-taxable Reason (i) Non-taxable Sum of money exceeding ₹ 50,000 received without consideration by Mr. Ram from his father is not taxable under section 56(2)(x) since the sum is received from a relative i.e., father of Mr. Ram. (ii) Taxable The difference of ₹ 50 lakhs between stamp duty value of ₹ 1,75,00,000 and actual consideration of ₹ 1,25,00,000 is taxable under section 56(2)(x) in the hands of Mrs. Radha since the difference exceeds ₹ 12,50,000, being the higher of ₹ 50,000 and 10% of consideration. ₹ 50 lakhs is taxable in the hands of Mrs. Radha. ₹ 175 lakhs is to be considered as deemed sale consideration for the purpose of computing capital gain in the hands of Mr. Govind. TAXATION (iii) Non-taxable Car is not included in the definition of property for the purpose of section 56(2)(x). Therefore, the car received by Ms. Agastha from her friend is not taxable.

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