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About Rent income

11 March 2021

if rent income received for industrial property with machinery,then that income in which head of income should be show
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7 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 11 March 2021

Rental income (in respect of residential/commercial property) is usually shown under Income from house property.

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 11 March 2021

Income from house property

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RAJESH C.JARIWALA (SELF) (79 Points)
Replied 11 March 2021

But that is composite rent i.e building and machinery,than no need to show after split?

CMA Poornima Madhava (CMA) (13112 Points)
Replied 11 March 2021

If letting out building and machinery are not separable (i.e. one dependent on the other), then entire income is treated as PGBP or IFOS, as applicable. But if letting out building and machinery are separable (that one is not dependent on the other), then rental income from building is treated as income from house property and that from machinery under PGBP/IFOS as applicable.

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Kapadia Pravin (17259 Points)
Replied 12 March 2021

Head of income will depend upon how have you entered into contract. study of contract. Either IFHP & IFOS or IFOS or PGBP

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CA HARSHITA AGARWAL (FCA) (71 Points)
Replied 12 March 2021

If in the rent agreement, you have separately mentioned the rent of building and Machinery, the it is advisable to take Building rent in HP head and claim standard deduction of 30% and Take machine rent in income from other source and claim (depreciation/ wear and tear) of machine against the rent of machine.

However, if you do not have any separate rent in agreement, it is advisable to go by the majority value or purpose.

anil jain (Partner) (1072 Points)
Replied 14 March 2021

If it is single activity means not a regular one and inseparable then it is chargeable under IFOS the related clause of section 56 is given below.

56(2)(iii) where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income-tax under the head "Profits and gains of business or profession";