02 November 2009
Dear Experts A building is let out with air condition, lift, lights, Generator etc. 1. Letting out these services are separable. 2. Letting out these services are not separable. How the receipt of rent will be treated and taxed.? I would also like to know, in case, the building can also be let out without all these services, what will be the tax treatment? Thanks in advance
02 November 2009
In case the letout is inseparable i.e. the tenent are not going to take the property on lease then it may fall under the purview of Business. It also depends on various other factors also like commercial exploitation of property, adventure in the nature of trade........
Refer SC decesion in case of Sultan brithers & national storage ltd.
It is better to split the agreement between poerty and amenities. For the amenities part it can show under business head and claim depn.
If only building let out then it will fall under HP head. you will get 30% deduction for repairs & maintence on net rent after deducting municipal taxes. Interest on loan will allowed on actual basis
02 November 2009
Thank You sir:) Suppose all the amneties are purchased with the help of loan amount which is actually borrowed for the purpose of construction of building. Can the assessee claim deduction on the Interest paid.
03 November 2009
For the purpose of amenities if the agreement are separate then it will fall under Business head and you can claim deduction of all expenditure. In case of HP head also you can claim deduction of Interest
03 November 2009
EX: IF THE PROPERTS IS HELP BY TWO BROTHERS(A&B)50%:50%, TAKEN THE LOAN ON THE PROPERTY AND INTEREST PAID SUPOSE 300,000. FOR THE PROPERTY AS HOLE,
NOW A & B BOTH CAN CLAIM THE INTEREST DEDUCTION, UPTO 150000
WE WILL NOT TAKE AS ONE HP
however this provision will not applicable when the property is let out
CAclubindia
