06 March 2014
An assessee has a building consisting of 3 floors. He has rented one floor I to a company. The other two floors i.e Floor II and III contain machinery which are let out to another company along with machinery. Can the assessee declare the income from floor I under house property and income from Floor II and Floor III under the head business/profession and claim depreciation on building and machinery used in those two floors.
06 March 2014
all the floors shall be offered for tax under income from house property unless the assessee wishes to state that he is in business of renting out properties.
06 March 2014
If your assessee has a business of renting of immovable property than he should show all the mentioned transactions as Business Transactions and also claim Depreciation.
In other case it is advisable to show it as a Income from House Property. But to do that you have to bifurcate rent for 2nd and 3rd floor between rent for Building and rent for machinery.
So rent from Building will be shown as a Income from House Property and Rent of Machinery will be shown as Income From Other Sources.
07 March 2014
Thank you sir, But if the rent from building and machinery cannot be bifurcated then what is to be done. The business of assessee is letting out properties. and suppose i have offered the rent from entire building under house property in 1st two years and now i want to offer it under business profession. Can i do it?
07 March 2014
If Business of Assessee is letting out properties than question of Bifurcation does not arises. Total rent from that building will be offered as Income from Business & Profession.
You can show it as Income from Business and Profession at any time.
08 March 2014
Thank you for the reply Sir. In case i offered the income under house property in initial 2 years and in the third year i want to offer it under business profession. Now what will be depreciation provisions. on what amount will i be eligible to claim depreciation. Whether on the original cost or on the WDV as at 3rd year.
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