Section 22 of the Income Tax Act, 1961, deals with the computation of annual value of property consisting of buildings or lands appurtenant thereto. It states that the annual value of such property, other than the portions occupied by the owner for business or profession, shall be chargeable to income tax under the head “Income from house property”.

In simpler terms, Section 22 determines the taxable income from a property based on its hypothetical rental value if it were let out. This hypothetical rent is known as the annual value of the property.

Here are the key points to note about Section 22:

1. Scope: Section 22 applies to all types of immovable property, including residential, commercial, and industrial properties.
2. Determination of Annual Value: The annual value is determined in three ways:
3. Rent Receivable: If the property is let out, the annual value is the rent actually received or receivable by the owner.
4. Hypothetical Rent: If the property is not let out, the annual value is the rent that could reasonably be expected if it were let out.
5. Nil Value: If the property is occupied by the owner for residential purposes or cannot be occupied due to the owner’s employment or business elsewhere, the annual value is nil.
6. Taxability: The annual value of the property, as determined above, is considered income from house property and is chargeable to income tax.