Amended and updated notes on section 38 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to building, etc., partly used for business, etc., or not exclusively so used.
Chapter IV (Sections 14 to 59) of the Income Tax Act 1961 deals with the provisions related to computation of total income. Section 38 of IT Act 1961-2023 provides for Building, etc., partly used for business, etc., or not exclusively so used.
Recently, we have discussed in detail section 37 (General) of IT Act 1961. Today, we learn the provisions of section 38 of Income-tax Act 1961. The amended provision of section 38 is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 38 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section-38: Building partly used for business or not exclusively so used
Section 38(1) of Income Tax Act
Where a part of any premises is used as dwelling house by the assessee,—
- (a) the deduction under sub-clause (i) of clause (a) of section 30, in the case of rent, shall be such amount as the Assessing Officer may determine having regard to the proportionate annual value of the part used for the purpose of the business or profession, and in the case of any sum paid for repairs, such sum as is proportionate to the part of the premises used for the purpose of the business or profession;
- (b) the deduction under clause (b) of section 30 shall be such sum as the Assessing Officer may determine having regard to the part so used.
Section 38(2) of Income Tax Act
Where any building, machinery, plant or furniture is not exclusively used for the purposes of the business or profession, the deductions under sub-clause (ii) of clause (a) and clause (c) of section 30, clauses (i) and (ii) of section 31 and clause (ii) of sub-section (1) of section 32 shall be restricted to a fair proportionate part thereof which the Assessing Officer may determine, having regard to the user of such building, machinery, plant or furniture for the purposes of the business or profession.