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Help required related to Income from house property

Reeb J. Das (Executive) (45 Points)

22 August 2010

Hi All...I need a help in solving two questions related to "Income from House Property"..from the paper "Tax Laws"-Executive Programme. the questions are as follows:

1. X owns a property, which is given on lease to Y for a period of 6 yrs, lease rent being Rs.10,000 per month. Y...more has a right to get the lease renewed for a further period of 6 yrs. Will this be treated as Income from House Property?

2. X owns a property, which is given on lease to Y for a period of one month rent being Rs.5,000. Y has a right to get the lease renewed for a period of one month, in each subsequent month, and such renewal is possible with mutual consent till 2020. Will this be treated as Income from House Property?

Any help will be appreciated. Visit my blog on www.reeb-thinks.blogspot.com

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3 Replies

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 22 August 2010

Yes both will be income house property.

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Dheeraj (Learner) (1100 Points)
Replied 22 August 2010

AS PER SECTION 27

THE LESSEE OF BUILDING IN CASE BUILDING IS LEASED OUT FOR NOT LESS THAN 12 YEARS IS DEEMED AS OWNER

SO, AS PER MY OPINION

THE HOUSE PROPERTY INCOME IS NOT TREATED AS LESSEE INCOME AS HE IS NOT THE OWNER OF BUILDING

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Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 22 August 2010

Error in first part of the answer as i had thought that only original term should not exceed 12 years which is not the case as the section reads

(i) in relation to any immovable property referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882).

Explanation.For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years ;

So even extension will be included and hence answer in first case would change.

But for the second part the date of starting the lease should be known to comment whether the same exceeds 12 years or not as if the term starts from 2010 it is a 11 years leas and hence not covered under section 269UA.

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