Accounting for lease rentals

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Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2013 A Company which leases one of its building to a hotel receives lease rentals. whether the rental received can be accounted on receipt basis. Whether the Lease Rental can be considered as Income from House Property.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 November 2013 1. Only and only if you are maintaining regular books as per mercantile basis for companies and on cash basis for tax (the emphasis is on the word REGULAR) you can claim lease rental on cash basis. Please note that there are several cases wherein such treatment has been allowed and several cases where it has been disallowed too. So judgment has often been case specifc:

refer:

Chennai Finance Co. Ltd. 81 ITD 7 (Hyd.

Amarpali Mercantile (Private) Ltd. vs. ACIT 45 ITD 386 (Del

Delhi High Court in Cyber Media (India) Ltd vs CIT [ 2011] 338 ITR 177

Mumbai Tribunal decision DCIT vs Stup Consultants (P) Ltd. No. 5617/Mum/2009, ITA No. 6062/Mum/2009, ITA No. 6063/Mum/2009

With regards to second question, it shall be treated as business receipts as it is a commercial property.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 November 2013 Leas from leasing property shall be assessed as income from house property & std deduction allowed u/s 24.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 November 2013 well tushar is right..however only to an extent. the treatment of rental income shall depend on case to case basis.

Each treatment has its own merits and demerits.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 November 2013 Please refer to hsi compilation and apply to the facts of your case:

http://incometaxindiapr.gov.in/incometaxindiacr/contents/DTL2011/casesec22.htm

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 November 2013 Charging provision u/s 22 states that income from house property ( here hotel ) shall be assessed under this head.

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2013 Thanks a Lot Tushar and Nikhil...

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 November 2013 you are welcome

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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19 November 2013 ur welcome.