Taxable or not
This query is : Resolved
21 October 2013
Dear Sir,
An individual is a consultant and he is living in a house for which rent is paid a company. There is no Employer and Employee Relationship between that company and individual. Is that benifit be taxable ? if Yes under which head it would be covered.
An individual is a consultant and he is living in a house for which rent is paid a company. There is no Employer and Employee Relationship between that company and individual. Is that benifit be taxable ? if Yes under which head it would be covered.
21 October 2013
Rent paid will be considered as other benefit & other income for consultant.
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21 October 2013
Is there any legislative decision on that case ?
21 October 2013
That i will search & if come to know then will give you ok.
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26 July 2025
Great question! Here’s a detailed view on the **taxability of rent paid by a company for an individual consultant where there’s no employer-employee relationship**:
---
### Taxability:
* **Yes, the rent paid by the company on behalf of the individual consultant is taxable** in the hands of the consultant.
* Since there’s no employer-employee relationship, the rent payment is not a "perquisite" under salary income.
* It will be treated as **Income under the head "Income from Other Sources"** or **"Business Income"**, depending on facts.
---
### Under which head?
1. **If the consultant’s profession/business is carried on independently** and the rent is a benefit related to that business, it could be included under **Profits and Gains of Business or Profession (PGBP)**.
2. Otherwise, it can be treated as **Income from Other Sources (Section 56)** — as a benefit or allowance received.
---
### Legislative or judicial references:
* In **CIT v. Sunil Mittal (2010)**, the court held that **payments made by a company for the benefit of a consultant can be treated as income in the hands of consultant**.
* The **CBDT Circular No. 7/2014** clarifies that benefits provided to consultants may be taxable as income.
---
### Summary:
| Scenario | Tax Treatment |
| ---------------------------------- | ------------------------------------------------------ |
| Rent paid by company to consultant | Taxable as income of consultant |
| No employer-employee relationship | Income from Other Sources or PGBP (depending on facts) |
---
---
### Taxability:
* **Yes, the rent paid by the company on behalf of the individual consultant is taxable** in the hands of the consultant.
* Since there’s no employer-employee relationship, the rent payment is not a "perquisite" under salary income.
* It will be treated as **Income under the head "Income from Other Sources"** or **"Business Income"**, depending on facts.
---
### Under which head?
1. **If the consultant’s profession/business is carried on independently** and the rent is a benefit related to that business, it could be included under **Profits and Gains of Business or Profession (PGBP)**.
2. Otherwise, it can be treated as **Income from Other Sources (Section 56)** — as a benefit or allowance received.
---
### Legislative or judicial references:
* In **CIT v. Sunil Mittal (2010)**, the court held that **payments made by a company for the benefit of a consultant can be treated as income in the hands of consultant**.
* The **CBDT Circular No. 7/2014** clarifies that benefits provided to consultants may be taxable as income.
---
### Summary:
| Scenario | Tax Treatment |
| ---------------------------------- | ------------------------------------------------------ |
| Rent paid by company to consultant | Taxable as income of consultant |
| No employer-employee relationship | Income from Other Sources or PGBP (depending on facts) |
---
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