BUSINESS INCOME

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 August 2010 During F Y 2007-08, Assessee company has given its entire theatre premises on rent. There are two agreements- one for screening of films and other for running canteen with two different companies.

The Income Tax Officer is of the view that this rental income is taxable under " Income From House Property " and are entitled for deduction towards municipal taxes paid and 30% towards repairs and maint.

I would like to know whether the officers view is correct ? Can this income be treated under " Income from Business " and expenses like salary, depreciation etc. can be deducted or under " Income from Other Sources " and claim depreciation as expense ?

Also can i have ref of relevant case laws.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 September 2010 If the intention is to stop the business done and the letting out is a permanent affair, income is to be assessed under the head "income from house property". On the other hand,if it is a stop gap arrangement, income has to be assessed under the head "income from business / profession against which all expenses including depreciation can be claimed as business expenditure / allowance.

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