Amount received fro vacating rented property

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Vikas Malhotra (Querist)

25 March 2011 Dear all,
One of my friend is vacating a prime property which is on reant to some other person and getting Rs 35 lakhs as charges for vacting. Under which head this amount will be taxable

Please advice

CA Kartik Pandya

CA Kartik Pandya (Expert)

26 March 2011 As per my knowledge the said incomed is deemed to be a Capital Gain and in no case it can be treated as income under any other head of Income tax.

Amit Jolly

Amit Jolly (Expert)

26 March 2011 It is covered under head house property not in capital gain bcz here person is not the owner of property

Vikas Malhotra

Vikas Malhotra (Querist)

26 March 2011 But Sir,
We are also not the owner of the shop but having procession so how can we show it under income from house property. Or we have to assumed to be deemed to be let out

Plz clarifiy

Praveen Bajaj

Praveen Bajaj (Expert)

26 March 2011 This has to be either Capital gains or Income from other sources. (It cannot be house property as receipt is on giving away the possession. after such event it is not covered under HP)

Since there is no element of ownership of shop as well as transfer of shop(since there is no right on the shop, there cannot be an element of exchange or extinguishment of right). Thus it cannot be capital gains.

In my opinion, it has to be other sources

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RK (Expert)

28 March 2011 Initially the question is not very clear. your friend is vacating the property which is occupied as tenant by any one else. Is he arranging this vacation as a broker?

The answer below is based on the following assumption-Your friend is tenant and getting the money for vacation.

Its only a miscellaneous receipt as there is neither transfer of goods/immovable property nor rendering any services. The payer cannot claim it as an expense for business or house property nor a capital expenditure on the property. This shall be miscellaneous receipt taxable under Other Sources.

Assuming your friend is a broker and facilitating this vacation...then could be treated as a business income by IT officer

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Vikas Malhotra

Vikas Malhotra (Querist)

04 April 2011 Sir,
How the person who had paid the money can claim as expenses and under which head. Suppose its business expense under which head will we show this expense

RK (Expert)

04 April 2011 Please check again.

"""The payer cannot claim it as an expense for business or house property nor a capital expenditure on the property""".

Vikas Malhotra

Vikas Malhotra (Querist)

04 April 2011 Means its income for the person who is receiving it but the person can't claim it as expenses who is paying it...

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