A partnership firm invested Rs.50 lakhs in a immovable property in the 'Firm's Name' with the 'firm's Funds' and gets a annual rent of Rs.500000.
Is this 5lacs treated as business income or Income from house property???
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Business income or house property income??
Replies (2)
(1) Property owned by a firm has to be treated as the property of the firm and not of its partners and its income can be assessed only in the hands of the firm - Bhai Sunder Dass & Sons v. CIT [1972] 85 ITR 28 (Delhi)/New Cotton & Wool Pressing Factory v. CIT [1967] 65 ITR 662 (Raj.)
(2) As renting of property is not supplimentary to the main object of business of the firm ( investment only in your case) so it can't be treated as business income.(pls ref. this case : Commissioner Of Income-Tax vs Arvindkumar Odhavji on 16 November, 1994)
so it would be treated as income from house property and not as income from business in the hands of firm.
A firms show its rental income from under income from House Property and claim the deduction U/s 24.
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