R B (DIRECTOR) (57 Points)
29 April 2011
a company have taken on lease a property with subletting rights.
the co wants to obtain LOWER rate of deduction for TDS certificate from jurisdicational ITO...
1 Can it apply on rent ?
2 is such rent taxable under house property ?
Harpreet
(* * * * * *)
(1670 Points)
Replied 29 April 2011
Below mentioned article is old but useful for u.
Income from subletting is also income from house property and you can avail of 30% standard deduction as available to income from house property. In the case of Smart (P) Ltd. Vs Commissioner of income tax, decided in High Court of Delhi, the issue raised was that Assessee earned income by sub-letting premises in its occupation, which was assessed by Assessing Officer as ‘Income from house property’ whereas Assessee claimed it to be assessed as ‘Business income’ on ground that property must be owned by Assessee before rent received therefrom could be treated as ‘Income from house property’ The question to be decided by High Court Whether since Assessee was in full control of property in capacity as a tenant and earned income from sub-letting of house property and there was nothing to suggest that ownership of premises was essential for purposes of levying income-tax. The high court decided in favor of revenue holding that the Assessing Officer was justified. Now, the issue is in the instant case, Assessee for his own reasons wanted it to be assessed under the head business income as probably he wanted more deductions, i.e. expenses on actual basis, to be allowed against the income as against standard 30% deduction available against house property income. However for other Assessees, who have no such issues and need only flat deduction to reduce tax liability, it makes much sense to take the income as income from house property and avail 30% deduction
Ketan
(Ass. Finance Manager)
(92 Points)
Replied 29 April 2011
Dear RB
This is he same case which we faced, we are the owner of shopping Mall & subleting the tenets under Leave Licese Agreement. we are trating the RENT as the "Icome from License Fees" on that base we are getting lower deduction certificate from ITO for each & every our tenets having their PAN & TAN numbers. for that you have to submit the projection for your income from the parties as wel as provision P & L Balance sheet for the year to them along with audited reports for last three years.
CAclubindia
