Income from House Property and Section 28 Amendment

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This discussion clarifies whether income from renting out a residential property, when considered an exploitation of business assets, is still treated as business income. Despite proposed Section 28 amendments, established Supreme Court rulings suggest this income can remain classified as business income. The classification ultimately depends on the specific facts of each case, including the company's objectives and leasing activities, with potential for future legislative or judicial clarification.

HIMANSHU

HIMANSHU (Querist)

12 August 2025 "Exploitation of business assets by giving on rent a residential property is still considered income from business and profession? In the Supreme Court decision in the case of CIT v. Universal Plast Ltd. [1999 (5) SCC 189], it was held that... In our case, the ACIT has passed an order that the income from rent is business income."
So now what is the effect Proposed Section 28 Amendment?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

12 August 2025 Rent from residential property, when shown to be an exploitation of business asset and not a case of business cessation, can still be considered business income under established case law and current Section 28 provisions.
The effect of the 2025 amendment does not directly override these judicial findings for rental income. Each situation still depends on your business's objects and the pattern of leasing activity.
The proposed Section 28 amendment in the Finance Bill 2025 does not fundamentally change the position in law regarding the treatment of rent from business assets as business income when circumstances fit the principles enunciated by the Supreme Court in Universal Plast Ltd. Each case, however, remains highly fact dependent and may be affected by further legislative clarification or judicial interpretation.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 September 2025 Good luck....

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