FCS Deepak Pratap Singh
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INCOME TAX QUESTIONS ANSWERS SERIES PART-XIV Whether properties rented for earning renting income by a company in all cases will be considered as income from house property? Dear Friends, In this article we are going to discuss an important judgement of the Supreme Court in which it was he
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FAQ :
Rental income is generally considered 'Income from House Property' if the property comprises a building and/or land attached to it, the taxpayer owns the property, and the property is not used by the taxpayer to run their own business or profession.
Yes, rental income can be classified as business income, particularly if the main object of the company, as stated in its constitutional documents like the Memorandum of Association, is to lease out properties and earn rent.
Key factors include the taxpayer's intention to conduct business through leasing, active ownership of the property, and whether the activities carried out align with the company's stated objectives for property letting.
The Income Tax Act does not differentiate between residential and commercial property for the purpose of 'Income from House Property' classification, provided the conditions are met.
Classifying rental income as business income often allows for the claim of related expenses and depreciation, which can reduce overall tax liability compared to the standard 30% deduction allowed for 'Income from House Property'.
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