Can father lets out his commercial property to son without taking rent, is this legal in India?

Yes, but ITO may add notional rent in father's ITR.

Even if we have proper rental agreement stating no rent is considered for letting out? Still they may add notional rent? If so, what is the use of that agreement?

Even if we have proper rental agreement stating no rent is considered for letting out? Still they may add notional rent? If so, what is the use of that agreement?

Rent agreement without any rental charge in itself is not tenable if ITO finds any tax theft. Though the chances of any liable tax on notional rent are 50:50, still it cannot be totally avoided.

I think you have a good case to argue that you have not collected any rent from Son.

The tax officer just can't determine notional rent without some evidence.

Giving rent free property to Son is tenable in law.

My views 

Yes. A father can let his commercial property to his son without charging rent; there is no general requirement that a lease between family members must involve rent. Put the arrangement in writing and clearly record whether it is a rent-free licence or a lease, along with the permitted use and responsibility for expenses. State-specific stamp duty and registration requirements may apply.

If the arrangement is genuinely rent-free, the father generally has no rental income from it. However, if the property is owned jointly, co-owned, or otherwise subject to a specific tax arrangement, the tax treatment may need separate review; the son should also check whether the business can claim any related expenses without rent actually being incurred.

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