Business Closed - Let out of Godowns - House Property or Business

[Rajendra Prasad]

ABC is a Small Private Limited Company.

After carrying manufacturing activity for 20 years business was discontinued in FY 2017-18.

The Factory was closed , Machinery was removed and part of the machinery was sold. There are no sales or operations in the year FY 2018-19. The company will not carry any business in future. But godowns were let out.

Company incurred the following amounts.

1. Gratuity Paid ₹ 50.00 Lacs

2. Salaries ₹ 5.00 Lacs

3 . Interest Paid to Bank on working capital limits : ₹ 20.00 Lacs (Still debtors are not realized and hence working capital limits could not be closed)

As there was no turnover can we claim these expenses as business loss.

Rent from godowns are to be treated as house property or business income.

Please clarify.

AI Summary

Small Company Seeks Clarification on Claiming Expenses as Business Losses Post-Closure; Queries on Rental Income Classification ABC, a small private limited company, ceased its manufacturing operations in FY 2017-18 after 20 years. The factory was closed, machinery removed, and some sold, with no sales or operations in FY 2018-19. The company will not resume business but has let out its godowns. It incurred expenses totaling 75.00 Lacs, including gratuity, salaries, and bank interest on unrecovered working capital limits. The company seeks clarification on whether these expenses can be claimed as business losses and if the rent from godowns should be classified as house property or business income.