WHether HP or Business Income?

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GAYATHRI RAM (Querist)
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15 July 2010 Mr. X had been using his factory site for his own business for few years for which he was claiming depreciation, etc. Later he had closed down his Business and had let out his Factory site for rent. Whether this rent will be treated as Income from house property or Business Income???

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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15 July 2010 I presume that Mr. X had permanently closed down the business.
If it is a composite lease and the rent of building is separable, that portion of rent should be assessed as 'income from house property'. The remaining portion of rent may be included in 'income from other sources'.
Citation :- CIT Vs. Kanak Investments (P) Ltd (1974) 95 ITR 419 (Cal).

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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15 July 2010 If Factory site is in name of business, i.e it is shown in books of business, then it will be treated as business income.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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15 July 2010 Yes business income if and only if the closing of business is temporary. If permanently closed my earlier observation will still hold good in view of the Calcutta high court decision cited therein.

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