Under the Income Tax Act, 1961, the owner of a house property (consisting of any building or land appurtenant thereto) is taxed on the income in the form of its annual value under the head “Income from House Property”.

Owner of the house property is the legal owner of a house property (means the person in whose name the property stands) who is chargeable to tax in respect of property income. But there are few cases where persons are deemed to be owners of the house property for the purpose of computing income from House Property.

•    An individual, who transfers house property otherwise than for adequate consideration to his or her spouse (not being a transfer in connection with an agreement to live apart) or to his minor child (not being a married daughter), is treated as deemed owner of the house property.

•    A member of a co-operative society, company or other association of persons, to whom a building or a part thereof is allotted or leased under a house building scheme of the society, company or association of persons, is treated as deemed owner of such property.

•    A person in possession of the property in part of performance of a contract within the meaning of section 53A of the Transfer of Property Act. The persons, who have paid consideration and taken possession of flat or building as per ‘agreement of sale’ will cover under this category even though the transfer is not yet registered and is treated as deemed owner of the house property.

•    A person having lease right in the property under a lease for a period exceeding two years in the aggregate including the term for which the lease may be extended, is treated as deemed owner of such property.

•    The holder of an impartible estate shall be deemed to be the individual owner of all properties comprised in the estate.

Thus allottees of flats in group housing schemes and persons who purchase properties on the basis of power of attorney, or under long term leases are liable to pay tax on the income from the property, so acquired.

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