## Charging Section — Section 22
> The annual value of any property — buildings or land appurtenant (attached) to a building — owned by the assessee is chargeable to tax under the head "Income from House Property".
### Three things must co-exist for a charge under Section 22
1. The property must consist of a building or land appurtenant thereto.
2. The assessee must be the owner of the property.
3. The property must not be used by the owner for their own business/profession (income of which is taxable).
---
### Condition 1 — Building or land appurtenant thereto
- Buildings: residential buildings, factories, offices, shops, godowns and other commercial properties.
- Land appurtenant: gardens, parking garages, etc., connected with the building.
Watch out:
- Income from letting out vacant land → taxed under Income from Other Sources or PGBP, not House Property.
- Rent from an under-construction property → taxable under IFOS.
---
### Condition 2 — Ownership
- Registration of the sale deed is NOT mandatory to be treated as owner.
- Ownership includes freehold, leasehold, and deemed ownership u/s 27.
- The owner of the building need not own the land it stands on.
- Ownership must exist during the previous year (not necessarily the assessment year).
- If ownership is disputed in court, the Income-tax Department decides chargeability until the court decides.
- Unrealised rent / arrears u/s 25A are taxable irrespective of ownership status.
---
### Condition 3 — Usage / Exceptions to Section 22
- The property may be used for residential or commercial purposes.
- Business use exclusion: if the owner uses the property (or part) for their own taxable business/profession, that portion is outside Section 22.
- Business of renting: if the assessee's primary business is letting out commercial properties, the income is charged under PGBP (Rayala Corp (P) Ltd — Supreme Court).
---
### Property held as Stock-in-Trade
- Even if the property is held as stock-in-trade, its annual value is still charged under House Property.
- Special Rule [Section 23(5)]: the annual value is NIL for 2 years from the end of the FY in which the completion certificate is obtained, provided the property is not let out during that period.
- For builders/construction companies, the property is stock-in-trade but rental income is assessed under House Property.