CA SOURAV KUMAR GANDHI (B.com (H), CA ) (133 Points)
12 July 2010Helo friends
I just wanna know that INCOME FROM PROPERTY DEALING will come under which head among 5 heads of I.T. Act.
1 house property
2 profits and gains from business and profession
3 other sources
please clarify me with due reasons and concepts
Amir
(Learner)
(4016 Points)
Replied 12 July 2010
Dear Sourav,
Sale/Purchase of property as a "stock in trade" will be treated as Business/Profession otherwise as Capital Gain.
Renting of Property - If only for the time being i:e so long as properties are not sold as Stock in trade - Businesss Income
If letting out of premises is part of business operations income from such premises is business income - Where there is a letting out of premises and collection of rents, the assessment of income as property income may be correct, but not so where the letting or sub-letting is part of a trading operation. In latter case it would be a trading receipt. A company formed with the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, cannot be treated as landowner but has to be treated as trader. In deciding whether a company dealt with its properties as owner, one must see not to the form which it gave to the transaction but to the substance of the matter - Karanpura Development Co. Ltd. v. CIT [1962] 44 ITR 362 (SC).
Whereas letting out with the intention to earn rental income on year to year basis will be taxable as House Property.
Raj Chitroda
(Accounts)
(325 Points)
Replied 12 January 2012
CAclubindia
