IMMOVABLE PROPERTY

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This query is : Resolved

CA. GOPAL SONIKA (Querist)

27 February 2008 An immovable property is being let out to a Company which in turn sublets the same to Director/Staff for residential purpose.

Now as per service tax act Immovable property is excluded from the scope of service tax if let out for residentail purpose.

Should the service tax be levied on rent paid by the company to the owner.

CA Hemant T Dewani

CA Hemant T Dewani (Expert)

27 February 2008 an immovable property which is letout wholly for resident purpose is exempt from service tax
so in my opinion it is not liable to service tax

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Querist)

28 February 2008 Mr Hemant, thanks for replying but only the opinion would not help. If U have any case laws then please provide.

Dayal

Dayal (Expert)

28 February 2008 Further subletting is an activity performed by the company and not by the lessor.

The lessor is letting out the premise to a company who is involved in business and commerce activity as such service tax will be charged by the lessor.

In your case it is being let out to an Individual who is an employee.

You can very well take the credit as it is in use for business and commerce, though it can be debated as no service is provided from the residence, unless you are able to establish the facts.

CA. GOPAL SONIKA

CA. GOPAL SONIKA (Querist)

28 February 2008 More reply awaited with case laws, if any

Dayal

Dayal (Expert)

28 February 2008 There is no case law but this is how you need to interpret in the act

Suresh Agrawal

Suresh Agrawal (Expert)

28 February 2008 Once the property is let out to a company which is involved in the business and commerce it shall be treated as commercial use even if it is let out to an employee for residential purposes.
Therefore being let out for commercial purposes service tax will be payable.

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