Section 23(4) of the Income Tax Act
Income-tax Act, 2025: s.21
Section 23(4) falls under section 23 of the Income-tax Act, 1961, which corresponds to section 21 (Determination of annual value) of the Income-tax Act, 2025.
Read section 21 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 23(4) is Smitaben N. Ambani v. CWT (323 ITR 104), cited in 44 of the 92 judgments on BharatTax that turn on this section.
Leading authorities on Section 23(4)
The annual value of a self-occupied property, for both wealth tax and income tax purposes, is the reasonable rent expected from a hypothetical tenant. When using municipal ratable value, statutory deductions permissible under municipal law must be added back to arrive at this expected rent.
Rental income from unsold property held by a real-estate developer is assessable under the head 'Income from House Property' and not as 'Business Income'. The treatment in books of account as stock-in-trade does not alter the income's character for tax purposes.
When a builder's business involves constructing and selling property, unsold units are considered stock-in-trade and income derived from them is taxable under the head 'Business Income', not 'Income from House Property'.
No disallowance can be made under section 14A if the assessee has not earned any exempt income in the relevant assessment year.
When an assessment is reopened under Section 263, the Assessing Officer's power to make a fresh assessment is confined only to the specific issues directed by the Commissioner for revision. The Assessing Officer cannot consider other items not part of the revisional direction.
