Clarification - renting of immovable property

[shyamal roychowdhury]

RENT OF IMMOVABLE PROPERTY It is clear that rent of immovable property for furtherence of busineess is taxable ( before the Honble DELHI HIGH COURT JUDGEMENT . My issue is when the companies takes house /flat on rent for /terming as GUEST HOUSE OF THE COMPANY & truly emplyoees who have come on tour & stay in the guest house or companies guest / or contractor for dicsussion stay in the guest house , weather this is termed FURTHERENCE OF BUSINESS OR THIS GUEST HOUSE WILL BE TREATED AS RESIDENTIAL UNIT NOT LIABLE TO SRVICE TAX .

[madhavvan n]

The expression renting of immovable property includes renting letting leasing licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but exludes renting of immovable property by a religious body or to a religious body or renting to na educational body other than commercial coaching centre hence guset house is covered under renting of immovable property since honble dhighcourt has ordered in favour of the assessee what action to be taken further is still a matter being debated upon since dept will appeal to supreme cort and then matter will be finally settled in law.

[Madhukar N Hiregange]

Assuming that the Delhi HC decision is not being consdered. The purpose of flat for employees is prely residential and there is no doubt the same is excluded. Guest house is excluded in the defintion. Therefore anyway no liability.

AI Summary

Renting of immovable property: taxable when for business use; guest house classification determines service tax liability.
Whether company guest houses constitute renting of immovable property taxable as use in the course or furtherance of business, or instead qualify for exclusions such as purely residential use or exclusions for religious and non commercial educational bodies, determines service tax liability; administrative views conflict and a favourable High Court decision for the assessee has prompted appeals and ongoing debate.