Service tax on immovable property rented for the purpose of lodging.

[Rakshith Bhaskar]

Dear Sir

We are a partnership firm and in position of a commercial building which we have taken on management and a lump sum lease amount where we don’t pay any rents to the owners of the property and we have let out a portion of the building for the purpose of Lodging / Hotel ( Only accommodation) to a tenant in the capacity of Property managers representing through a partnership firm. We are 3 partners who divide the rent in the ratio of 50:25:25. We have rented the property for last 9 years starting with and annual rent of Rs. 14,40,000/- per Annum and after all the escalation now the rent is ₹ 18,90,000/- per annum.

1. Is the immovable property let out for the purpose of and lodging by a partnership firm liable for service tax? Is it exempted?
2. our tenant charges rent not more than 1000 rs. per day
3. As Co owners of the partnership firm, not the property, we have received rents and declared that each co owner of the firm gets less than Rs. 10 lakhs as rent when dived by 3 partners but the firm is collecting on behalf. How is this treated now?

kindly request you to help me with this

regards

rakshith

AI Summary

Partnership Firm's Service Tax Query: Can Partners Claim Individual Exemptions Under Tribunal Judgment? A partnership firm managing a commercial building is leasing a portion for lodging purposes. The firm, consisting of three partners who share the rent in a 50:25:25 ratio, has leased the property for nine years with current annual rent at 18,90,000. The partners inquire about service tax liability, noting the tenant charges less than 1,000 per day. They report each partner receives less than 10 lakhs annually. A respondent suggests individual exemption of 10 lakhs per partner, referencing a tribunal judgment requiring separate rent deeds, cheques, and bank accounts for each partner to qualify for exemptions.