What is tenancy right
This query is : Resolved
12 March 2014
what is tenancy right self generated n why index cost of acquisition is nt applicable in case tenancy right?
12 March 2014
There are two types of agreements for taking any property on hire and these are
a) Lease
b) Tenancy i.e Rent
In case of Lease it is for a period mentioned in the lease deed and on expiration of the term the agreement comes to an end and no tenancy right is generated.
In case of rent the rent is payable every month or yearly as the agreement has been made. Now, there is no end to rent agreement till it is cancelled by both the parties and hence the more the number of year you stay in the house you fee the property as yours and any repairs or damage to the property is not tolerated by the tenant. Therefore, as per the Urban Area Land act you get the right in the ownership of the property and cost of acquisition of that right is NIL. The rent paid cannot be treated as payment towards the ownership right as it is a revenue expenses.
This is the reason why no cost of indexation is allowed as the cost of owning the tenancy right is NIL.
a) Lease
b) Tenancy i.e Rent
In case of Lease it is for a period mentioned in the lease deed and on expiration of the term the agreement comes to an end and no tenancy right is generated.
In case of rent the rent is payable every month or yearly as the agreement has been made. Now, there is no end to rent agreement till it is cancelled by both the parties and hence the more the number of year you stay in the house you fee the property as yours and any repairs or damage to the property is not tolerated by the tenant. Therefore, as per the Urban Area Land act you get the right in the ownership of the property and cost of acquisition of that right is NIL. The rent paid cannot be treated as payment towards the ownership right as it is a revenue expenses.
This is the reason why no cost of indexation is allowed as the cost of owning the tenancy right is NIL.
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