Rental income versus business income
This query is : Resolved
24 January 2013
The assessee company is premimarily involved renting of immovable property. I remember reading one of the Karnataka High Court decision holding that such income is income from business. can anyone help me with the caselaw??
Guest
Guest
(Expert)
24 January 2013
ASSESSMENT OF RENTAL INCOME FROM IMMOVABLE PROPERTY
No straitjacket formula can be devised to determine conclusively as to under which head income from immovable property should fall; all the relevant factors need to be necessarily looked into to decide the character of income; if the facts show that the assessee is doing a complex commercial activity by exploiting the immovable property, then the income would fall under the head “Profits and gains from business or profession”; if on the other hand, the assessee has simply let out the space and is earning the rental income, it would fall under the head ‘Income from house property’.
I was unable to find the case law, but this is what i found from taxmann's site.
Link : http://www.taxmann.com/datafolder/Flash/flashbn18-5-09_4.htm
No straitjacket formula can be devised to determine conclusively as to under which head income from immovable property should fall; all the relevant factors need to be necessarily looked into to decide the character of income; if the facts show that the assessee is doing a complex commercial activity by exploiting the immovable property, then the income would fall under the head “Profits and gains from business or profession”; if on the other hand, the assessee has simply let out the space and is earning the rental income, it would fall under the head ‘Income from house property’.
I was unable to find the case law, but this is what i found from taxmann's site.
Link : http://www.taxmann.com/datafolder/Flash/flashbn18-5-09_4.htm
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