Income from other sources

[DEVKUMAR KOTHARI]

Any organized activity carried in a systematic manner is regarded as a business activity.Income earned from any business operation in different manner will not necessarily be income from business. Depending on nature of income and manner in which it is earned different type of income can fall under different heads. For example if there is letting out of property to tenants, the rental income will be u/h income from house property, if surplus funds are deployed in FDR interest may fall u/h income from other sources, if a capital asset is sold the gain will fall u/h capital gains.Even sale fo depreciable assets used in business in considered u/h capital gains. When an asset is held in course of business, cost of holdign and carrying asset are allwable as normal business expenese irrespective of head in which particular type of income may fall. Therefore, when investment assets are held as capital assets, the expenses for holdign and carrying assets need to be allowed u/h business income irrespective of heads under which income may fall in due course. Refer definition of business which include adventure in nature of commerce- investmetns are such adventure. View of readers are solicited. Readers may also refer article on this website on this issue .

AI Summary

Debate on Deducting Investment Holding Expenses as Business Expenses: Immediate Benefits vs. Indexed Cost Benefits A discussion on a forum addresses the classification of income under various tax heads, such as business income, income from house property, and capital gains. The initial query suggests that expenses related to holding investment assets should be deductible as business expenses regardless of the income head. A respondent argues against this, citing practical difficulties in maintaining records and the potential loss of indexed cost benefits. The original poster counters by emphasizing immediate benefits and tax advantages of classifying such expenses under business income. The discussion highlights differing views on tax treatment and record-keeping for capital assets.