Circular, Instruction & Case Laws

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Rental of Building On Longer Term Even By A Hotelier Can Not Be Business Income !

Income Tax Act 1961 has express provision of charging income from rental of building or house under the head Income from House Property . Thus , most of the court decision are unanimous about the treatment of the rental income usually under Income from House Property .

This is so , even in a case where a person who is in business of hotel or lodging , gives the house or building or space on rent to tenant on a longer term . Recently Kerala High Court in case of Joseph George and Co. vs ITO and Anr. 328 ITR 161 grappled with the issue and in a very brief order held as under

Only two issues arise from the three questions raised in the connected appeals filed by the assessee. The first issue is whether the income received from building under the name “Konny Building” is business income or not. Counsel contended that the assessee is engaged in letting out rooms in the lodging house and the Konny Building is one rented osuggestedbyMay20120ut to the bank on long-term lease. It is conceded that the income from the lodging building is treated as business income and the appellant has no grievance against the same. However, we are unable to accept the appellant’s contention that rental income from the Konny Building also should be treated as business income because letting out building on long-term lease is not a business activity at all. While lodging is business, letting out building to the bank cannot be treated as business. It is to be assessed as income from property. We, therefore, uphold the finding of the Tribunal with regard to the confirmation of assessment on the income from the Konny Building.

Thus , it must be kept in view that even if someone is in the business of giving space on rent , if the rental is not on day to day basis, chances of falling income from such property under the head “Income from House Property “ is very high because out of five heads of income , one head is very specific to rental income of buildings or houses .

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Vodafone Wins ! Tax Dept Has No Jurisdiction to Tax Deals of Two Non Resident Companies For Shares Transactions Out Side India

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Vodafone wins ! Supreme Court of India has just  set aside a Bombay High Court judgement directing  Vodafone International Holding to pay income tax of Rs 11,000 crore on its buy transaction with Hutchison .Readers may recall that what had … [Continue reading]

Can Long Term Loss Computed With Indexation Be Adjusted with Long Term Capital Gains Without Indexation?

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The same kind of question can be put as  “ Can short term capital gains on shares be adjusted with short term capital loss on sale of immovable property? “ . In both the aforesaid situation, there is chance of a tussle between A.O and the … [Continue reading]

If original return filed electronically , the revised return must be in electronic mode only!

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Centralised Return Processing Scheme, 2011 is out vide NOTIFICATION NO.2/2012[F.NO.142/27/2011-SO(TPL)], DATED 4-1-2012 by which CBDT in exercise of the powers conferred by sub-section (1A) of section 143 of Income Tax Act, 1961 (43 of 1961), the … [Continue reading]

Subsidy in Larger Interest of Public to Create Employment is Capital Receipt: J & K High Court

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Whether subsidy received by an assessee is taxable or not depends on the question whether the said subsidy is capital receipt or revenue receipt.There is no straight-jacket principle of distinguishing a capital receipt from a revenue receipt. It … [Continue reading]