Rent on commercial property vs business

This query is : Resolved

Eswar Reddy S (Querist)
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17 June 2014 Hi all , Upto FY-2012-13 our client was running theatre and getting income.For 2013-14 he has given the the theatre for rent. Based on 26AS and Service tax registration certificate , I came to the conclusion that it is income from house property.[26AS --194I and ST RC --Renting of immovable property ] But my boss wife is telling that it is business income as the client incurring each and every expense incidental to the running of the theatre. As per IT ACT house property means any building or land. Really the hell with the issue. Can any body give me more convincing answer ?

CA UMESH DULAL

CA UMESH DULAL (Expert)
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18 June 2014 The income is either treated as income from business or income from other source.

CA UMESH DULAL

CA UMESH DULAL (Expert)
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18 June 2014 If the assessee has intention to return to business of running of theater in near future and renting is to mitigate financial hardship, then it is treated as income from business.

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CA UMESH DULAL

CA UMESH DULAL (Expert)
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18 June 2014 In other case, it is treated as income from other sources as theater comprise of buildings, furniture, plant and machinery etc and it each items can not be let out individually but has to be let out collectively.

Rupesh Jain

Rupesh Jain (Expert)
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18 June 2014 you are giving the building and machinery togeather on rent then you have to separate both rental value and then you have to tax accordingly

building rent will taxable under the head Income from house property and machinery rent will taxable under business income.