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Method of accounting - shopping mall rental income

Vinod (CA in Practice) (445 Points)

10 July 2012

Dear Friends,

I have 2 doubts:

1. In case of the rental income of a shopping mall owner, is it permissible to follow cash method of accounting ? That is, if he did not receive the rent from a tenant for a particular month or period, do he need to recognise it as income ? In case of vacancy, he dont need to consider it. But here the shop is not vacant, but rent not realised.

2. In case of advance payment to contractors, is it compulsory to deduct TDS ? It is an advance which has to be adjusted against the future bills.

Please share your views.

Thanks in advance..

vinodaca74 @ gmail.com

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2 Replies

Vikram Bhatia (CA Final) (122 Points)
Replied 10 July 2012

1. As per Income Tax Act, assessee can adopt any method of accounting whether cash or mercantile.
Rental income from shopping mall does not fall under income from House Property bcoz it is not for resedential purpose rather it is totally commercial building so it shall be covered under income from Business & Profession and accordingly provison as per Sec 30 to 37 sall be applied.

2. As per Sec 194C of Income Tax Act 1961, TDS shall be deducted on payment or credited, whichever is earlier so at the time of advance payment TDS has to be deducted.