Taxable or not

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carohitjasuja (Querist)
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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.

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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21 October 2013 Rent paid will be considered as other benefit & other income for consultant.

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carohitjasuja

carohitjasuja (Querist)
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21 October 2013 Is there any legislative decision on that case ?

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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21 October 2013 That i will search & if come to know then will give you ok.

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Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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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**:

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### 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.

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### 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.

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### 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.

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### 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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