Income from commercial property letting out

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This query is : Resolved

ajay nair (Querist)

09 December 2016 Does anyone know if given the Supreme Court (SC) ruling(in the case of M/s Chennai Properties & Investments Limited, held that if letting out of properties was the business of the taxpayer, then its income would be chargeable to tax under the head 'profits and gains of business or profession' as opposed to 'income from house property'). Does this mean henceforth, an individual letting out a commercial building would be able to treat his/her income as "income from business" and hence a) also be able to claim depreciation on the building b) able to claim service tax paid as business expense? I am confused on this especially as my CA seemed to refer to older cases which indicate commercial property needs to be treated as house income. In my case, letting out commercial property is the only income.

Amol S Joglekar

Amol S Joglekar (Expert)

09 December 2016 are you an individual OR Company?

ajay nair

ajay nair (Querist)

09 December 2016 I am an individual owning the property

Amol S Joglekar

Amol S Joglekar (Expert)

09 December 2016 So, better follow what your CA is saying. It is bit difficult for the status "Individual" to prove that letting of commercial property is his/her BUSINESS.

CA Suresh Jain

CA Suresh Jain (Expert)

09 December 2016 The case referred by you is not applicable to Commercial Property, it is applicable to the Companies who has letting out of the property as their main and explicit Object in Main object clause. The Supreme Court Case referred to by you is facts specific and can not be generalised

ajay nair

ajay nair (Querist)

09 December 2016 Thank you N Jain and Amol for the valuable advice. I think I will explore avenues to register a propreitership or pvt ltd company

Amol S Joglekar

Amol S Joglekar (Expert)

11 December 2016 Yes, certainly that will be a good planning. Better go for Company form of organisation rather than proprietorship

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