Ramakrishna (student) (88 Points)
05 March 2013
A partnership firm invested Rs.50 lakhs in a immovable property in the 'Firm's Name' with the 'firm's Funds' and gets a annual rent of Rs.500000.
Is this 5lacs treated as business income or Income from house property???
krishna bhatt
(employee)
(236 Points)
Replied 05 March 2013
(1) Property owned by a firm has to be treated as the property of the firm and not of its partners and its income can be assessed only in the hands of the firm - Bhai Sunder Dass & Sons v. CIT [1972] 85 ITR 28 (Delhi)/New Cotton & Wool Pressing Factory v. CIT [1967] 65 ITR 662 (Raj.)
(2) As renting of property is not supplimentary to the main object of business of the firm ( investment only in your case) so it can't be treated as business income.(pls ref. this case : Commissioner Of Income-Tax vs Arvindkumar Odhavji on 16 November, 1994)
so it would be treated as income from house property and not as income from business in the hands of firm.
NAVEESH DHAR
(ADVOCATE- TAXATION ADVISOR)
(427 Points)
Replied 20 April 2013
A firms show its rental income from under income from House Property and claim the deduction U/s 24.
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