15 March 2014
Hello Experts I am doing my CA articleship and I want to ask one thing that wheteher we will apply section 44AD in this case or not, where the business of assessee is to give plant and machinery on rent...or it will be computed under the head income from other sources..??
15 March 2014
Nature of income depends upon the nature of business in which firm involves. If business of the firm is to give the property to other on rent, then such income will be covered under the head Business income, otherwise under the head income from other sources. Expenditure can be claimed to incur such income.
PTS scheme u/s 44ad is applicable for Business income not exceeding Rs 1Crore.
15 March 2014
Thanku for the reply but dont you think so that,section 44AD applies only in those cases where there is a trading of goods and services involved..So, how can it be applicable in this case because here the assessee is earning income by giving plant and machinery(i.e generators) on rent.. He is not engaged in trading of goods... Isnt it..?? Beacuse the basic reason before section 44AD is that the person who is involved in trading of goods,hardly earns an income of 5-10%,that's why the government has adopted this technique because its an easiest way to calculate the income by applying this method. Please cleare my doubt...please..!!
15 March 2014
Dear mohit, Where the income is charged under the head PGBP ,those business income are subjected to avail PTS scheme,now it may be any kind of business,not only it is related to trading of goods,but also anything in the nature of a business.
15 March 2014
Actually, i had also posted this on CAclub page but no one has given me the answer till now. Actually,sir i want to know that how will we compute capital gain in those cases where the house property is taken over by contractors for the construction of 5 floors and they incur/bear the complete cost of construction & they also give some amount to the owner of that house property and in return they normally take 2 Floors out of 5 Floors which they have constructed.
So,how will we compute capital gain on the transfer of those 2 floors and how will we treat that amount which they give to the owner of that house property?
So,can u please explain me the different aspects of this case!
15 March 2014
ok first of all its a clear case of LTCG,i.e concept of indexation would apply. Now,Taxability in the hands of owner, 1)Full Value of consideration- Fair value of property as on the date of ransfer LESS.2)INDEXED Cost of acquistion--Cost of previous house lESS 3.)Indexed COI & COA of the ownwer-would be nil as in your case it is expended by other party. Therefore 1-(2+3)would be LTCG. Again if the owner purchase a new residential house wihin 3 years whole of amount would be exempted U/S 54
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