Tax implications for rent received

This query is : Resolved

yogesh vijaykumar shah (Querist)
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06 January 2013 Our builder proposes to redevelop our housing society. For this purpose he is insisting to stay at other place for the period of 1 to 2 years. In consideration the builder is paying the rent of Rs 9000/- per month which is paid to the houseowner. Whether rent received from builder is treated as income from house property or income from other sources and rent which is paid, whether the same can be considered for HRA Exemption. Kindly advise.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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06 January 2013 In case the compensation received has been utilised towards payment of rent, the amount received is not taxable.
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In case of property under construction the provisions of IFHP applies when the construction gets completed. In your case the property is under demolition and applying the abovesaid analogy it can't be said that the income which you have received is of the kind IFHP.
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WHen an Income is not taxable under the 4 heads, it is made taxable under the head IFOS U/s 56, from which the rent paid can be claimed as deduction U/s 57. In your case it results into NIL Income.
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