TaxTMI 
TaxTMI 
Income from Renting under ‘House Property Income’ or ‘PGBP’
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....ncome from Renting under ‘House Property Income’ or ‘PGBP’<br>By: - Vivek Jalan<br>Income Tax<br>Dated:- 8-11-2024<br><br>Income from rental property has different connotations depending on whether it is treated as house property or business income - * Rental income from a property could be treated as income from House Property and/or income from Business and Profession. * If the prope....
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....rty income is declared as business income, then the owner can claim a tax deduction on actual expenses. * Property income is considered as income from house property if the property is not used by the owner for business or professional purposes. An individual would prefer to show rent as business income, which allows her/him to deduct all the expenses incurred to maintain the property, claim de....
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....preciation and not pay notional rent when the property is not let out. Whereas, Taxability as House Property provides a standard deduction which is limited to 30% of the income along with a deduction on interest paid on borrowed capital for the purposes of acquisition, construction, repair, reconstruction, (subject to limitations provided under the Act). Taxpayers will always go to option of inclu....
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....ding rental income as business income which will in turn mean revenue loss for the government. The Finance Act (No 2) 2024 inserted 3rd explanation to Section 28 of Income tax Act as follows, w.e.f. 01-04-2025 - 17[Explanation 3.--It is hereby clarified that any income from letting out of a residential house or a part of the house by the owner shall not be chargeable under the head "Profits and g....
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....ains of busin ess or profession" and shall be chargeable under the head "Income from house property"] However, for the period before this, the debate continues. In the case of NATIONAL LEASING LIMITED, NATIONAL REALTY PVT. LTD., NATIONAL REALTY PVT. LTD. [FORMERLY, NATIONAL LEASING LTD.] , VERSUS THE ASSISTANT COMMISSIONER OF INCOME, CIRCLE 3 (6) , MUMBAI, THE DEPUTY COMMISSIONER OF INCOME, CIRC....
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....LE 5 (2) , MUMBAI, THE I.T.O. WARD-3 (5) , MUMBAI. - 2024 (10) TMI 1209 - BOMBAY HIGH COURT the appellant claimed that such income from renting property should be classified under "Income from Profits and Gains of Business or Profession" rather than "Income from House Property". The Hon'ble High Court gave various principles for determining the same - 1. Primary business activity ....
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....to be seen - The nature of the business and the main objective as defined in the Memorandum of Association should be seen. As per the Supreme Court's judgment in M/S CHENNAI PROPERTIES & INVESTMENTS LTD VERSUS THE COMMISSIONER OF INCOME TAX - 2015 (5) TMI 46 - SUPREME COURT, when leasing properties is the primary business activity, such income should be classified as business income. The SC ju....
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....dgement in the case of EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LIMITED VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL - 1960 (11) TMI 7 - SUPREME COURT is distinguished. 2. Principle of consistency to be seen - The principle of consistency as established in RADHASOAMI SATSANG VERSUS COMMISSIONER OF INCOME-TAX - 1991 (11) TMI 2 - SUPREME COURT is important. Incase the department had treated ....
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....similar income as business income for many previous assessment years, and there is no change in the business, the stand cannot change now.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....