Guest house income - hp or business income

Income from business/profession. Wait for more replies.

According to me when there is no service provided it must be considered income from house property. But need opinions of experts.

Dear Manmeet 

It will be considered as business as the period of stay is of 1 day or 2days. So it can be said as a business. In House property things goes in different manner as their is a rent agreement between tenant and lanlord.

I hope answer is clear to you.

Regards 

Yes sir it will be House property income, Since the act does not specify the distinction between the income from Residential buling and Commercial Buliding hence the income received as rent shall be regarded as IHP.

Refer case law in this regrads.

https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/taxnewsflaash/Documents/india-june27-2013no4.pdf

Dear Saroj 

As there is no rent agreement in the same how you will prove it as a rental income ??

Regards 

 

Dear Manoj

For the purpose of determining income under IHP follwing conditions should be satisfied. These are:

• The property should consist of any building or land appurtenant thereto

• The assessee should be the owner of the property

• The property should not be used by the owner for the purpose of any business or profession carried on by him, the profits of which are chargeable to tax.

Unless all the aforesaid conditions are satisfied, the property income cannot be charged to tax under the head ‘Income from House property’. In his case this canot be presumed that renting out is his business hence it shall definately will be IHP.

Dear Saroj

1.Please put some light on how you will fill it in your income tax return??

Where we have to fill in the details of tenant with pan no. (in this case will you mention all be these 100 people pan no and details in income from house property)

2. If you A.O ask you for rent agreement for this house property under scrutiny then what should be provided to them in place??

Regards 

Manoj As far as concern with putting it into Return .if u see there there no such mandatory requiremnet to put Tenant Pan No. and as far as concern with A.O ....He can demand for documents for evidence of rent received which can be easly be made available.

Dear yes it is not mandatory but if it becomes mandatory in future then?? :)))) regards

Dost income tax does not work on imagination or future expactation.we should not be hypothetical.

For property rented out as a guest house, treatment of the rental income from the source would depend on whether the premises has been simply rented out or the title owner of the property is running and managing the guest house. So, for the former, accruing income shall be charged under the head income from house property and the later shall be charged under income from business. For the corporate guest house, which is let out to employees of some corporate group, income shall be charged under the head income from business. And as though even in case the property is kept vacant, the tax is charged on the deemed rental income, so it will be good in case the owner lets out the property for use in some or the other way.

Dear saroj please refer to judgement: Manohar Singh vs Commissioner Of Income-Tax, ... on 9 February, 1965 in the conclusion point no 5 clearly said if under a lease or licence than consider under income from house property otherwise in point 6 clearly says that it is a business income. please. Consider it and confirm the same as may be i can be wrong in interpretation and reading. regards

Also i request you to read the facts of the case. :)

Dear manmeet.....The tax treatment would depend on whether the owner is managing the guest house or one is getting only the rental income. If the owner is operating the guest house, the rent will be considered as income from business or profession. If owner only receive a rental income and the tenant manages the guest house, it will be considered as income from house property.

So dear Manmeet.....check whether your client is managing & operating the guest house or not....If YES....then the income of your client will be taxed under the head PGBP....

Otherwise imcome will be taxed under house property income......