Notional rent

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HIMANSHU (Querist)
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15 September 2012 We are a registered Partnership firm carrying on business of real estate development . Couple of years ago we had constructed a residential building in which we have retained 4 residential flats, out of which 3 flats were/are given on leave and license basis. The 4th flat is used by the partners for personal use and is shown vacant in our Balance Sheet. We have shown the flats as Fixed Assets in our Balance Sheet and claiming Depreciation on all the 4 flats. The Income Tax Department is assessing our rental income under the head Income from Business & Profession. We wish to know whether Income Tax Department can calculate notional rent (Annual Value) on the 4th flat which is not given on rent. Kindly advice

Amol S Joglekar

Amol S Joglekar (Expert)
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15 September 2012 No, it can not....as it is given by the firm to its partner for personal use. The flat is reflected in the balance sheet of the firm. The firm is free to use it the way it wants. Notional rent can not be added.

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