Renting of Residential Houses

[CA Rachit Agarwal]

Company 'A' is engaged in the business of letting our residential houses. Company assessee 'B' received the residential houses from 'A' and let out the same to employees.

Whether letting out of residential houses by 'A' would be covered under Renting of Immovable Property used in the furthereance to the course of business?

Please provide the relevant case laws if any.

[Rama Krishana]

Renting of immovable property for residential purpose is not liable to service tax. Whereas renting of immovable property for furtherance of business is taxable.

In case intention of landlord is to give the property for residential purpose but the same is misused by tenant, though service tax is not leviable but landlord must take appropriate steps to escape from the purview of service tax as well as mischief of stamp duty.

AI Summary

Renting of immovable property for residential purpose is not taxable, while business lettings attract service tax obligations. Renting of immovable property for residential purpose is not liable to service tax, while renting for furtherance of business is taxable; if tenants misuse residential premises for business the landlord should take steps to preserve the residential character and guard against stamp duty and related risks.