Partnership or renting service

[S.C. WADHWA]

We have received rent from one of our building from the year 2007 to March 2015
on monthly basis as per agreement. 1) Fixed rent 2) variable rent of 5%
of sale value also on monthly basis. Now from April 2015 we are getting amount 40% of
gross sale value and no fixed rent will be received in future.
Dear Experts, We have received rent from one of our building from the year 2007 to March 2015 as per agreement i.e 1) Fixed rent 2) Variable rent @5% of Gross sale value per month. From April we are getting 40% of gross sale value. No fixed rent fill be received in future. No minimum guarantee of value. Now my query is whether we drafted a partnership deed and inform to the deptt that tenant has vacated the building or this 40% receipt to be treated as rental income. Please give your expert opinion immediately to enable us to deposit service tax if applicable well in time. Regards, WADHWA
Regards,
WADHWA

AI Summary

New Income Structure from Building: Rental Income or Partnership Profit? Service Tax Implications Explained. A query was raised about whether a new income structure from a building should be treated as rental income or as part of a partnership. Initially, fixed and variable rent was received, but from April 2015, the income shifted to 40% of gross sales without fixed rent. An expert advised that without a partnership deed, the income is considered rental and subject to service tax under 'Renting of Immovable Property.' However, if a partnership deed exists and the income is unrelated to the property, it is treated as partnership profit, exempting it from service tax.