Capital Gains

[Guest]

The company has been alloted land and right to construct Building on that under a lease of 99 years. The company subleases the same on exactly the same term ( Period 99 years ) and receives rent every month for the lease term. No upfront payment has been taken by the lessor. Query: How would this income be taxed ? Will income be treated as Capital gain ?

[CAGOPALJI AGRAWAL]

It would be income from other sources. Since there is no transfer of capital asset hence can not be treated as capital gain.

AI Summary

Income characterization: lease rents from long-term sublease treated as income from other sources, not capital gain. Receipts from a sublease of a long-term lease, when there is no transfer of the capital asset and no upfront consideration, constitute periodic rent taxable as income from other sources, not capital gains.