Income from house property v/s profit/gain from business/pro

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2013 We are company manufacturing parts of boiler. We have constructed Factory and Office Building and we are going to lease part of factory and office building to other company. In Future we might sale the same area to that same company.

But as of now we are receiving lease income. This lease income will be taxable under Income from House Property or Income from Business Income??

Thank you for help.

CA Parul Saxena

CA Parul Saxena (Expert)
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17 October 2013 Income from house property.

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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17 October 2013 It will not be business income and prov of income from house property will be applicable and will also get statutory deduction of 30% under sec 24(a).

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Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2013 thanks..

Further, next doubt related to above.. in books of company, whether the same asset wil be shown as Fixed Asset or as Investment.

What abt Depreciation???

CA Parul Saxena

CA Parul Saxena (Expert)
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21 October 2013 Fixed Asset..........depreciation can not be claimed...

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 October 2013 Since you are owner the owner is entitled to depreciation and should be shown as fixed assets only and dep can be claimed by owner.

CA Parul Saxena

CA Parul Saxena (Expert)
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21 October 2013 Depreciation can be claimed only if fixed asset is used for the purpose of business.But in this case asset is not used for the purpose of business.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 October 2013 It is still owned by the company under finance lease and even if not used directlty by them then also it is earning income for them hence will be enititled for depreciation.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2013 Company is earning under finance lease but company is considering its income under house property and not Business income..
So exactly where depreciation deduction will be allowed??

CA Parul Saxena

CA Parul Saxena (Expert)
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21 October 2013 Mr.tushar depreciation is allowed if and only if asset is owned by the assessee and the same is used for the purpose of business. Leasing is not the business of the company.
It is income from house property and 30% deduction is available on it.
So in my opinion depreciation can not be claimed by the assessee on such an asset which is not exclusively used for the business purpose.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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21 October 2013 Agree with Mr. Tushar,
It will be taxed Under House Property...

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 October 2013 Mrs Parul Saxena,

Refer CIT v.Smt A.Sivakami and Another(2010)322 ITR 64

Assessee allowed depreciation even in case she was not the legal ownwer of the assets.

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CA Parul Saxena

CA Parul Saxena (Expert)
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21 October 2013 are owner ki bat kar kon raha he i am saying that IT MUST BE USED FOR BUSINESS PURPOSE...aapke ghar me sofa he uska depreciation claim kar loge kya business me???????

Querist : Anonymous

Querist : Anonymous (Querist)

21 October 2013 thanks..agreed ki depreciation cnnot b claimed..

But i m bit confused about property being included in Fixed Asset..

as per whole discussion, it will be included in Fixed Asset but Depreciation will not b claimed..

But as per Income Tax, we take whole block of asset and not individual asset for dep calculation..

So i thought of showing this property as investment in books..