I have a green land (other than a 100% Self occupied house) in Town and within Municipal area. I have constructed a lodge (15 Rooms @ 1,000/- Per Room Per Month) & given to students on rent on the said land in 50% area and getting Rental income. On rest 50% area of green land i am growing flower ( ...) and selling it & earning money. (purchaser of these flowers sell it to worshippers in the Temple for worship.)
Please determine the heads of income ? Thanks.
as the land is in municipal area, they have divided the land in proportionate ratio for specific purpose,
for cultivation - its agro income, provided u can show the the receipts of selling the agro products through the proper channels.
for the building portion, its business income.
yes it may come under 2 heads ..
1) income from house property ...if ur business is not constructing and giving them to let out
income from business ...if ur business is construct and give them to letout
2) Income from other sources --Flowers Sale
Hi,
I agree with Rames.
Income from property is generally taxed under the head Income from HP, as per the definition sec 22 any property consisting of building or any land attached to it of which the assessee is owner shall be taxed under the head Income from House Property, however there is one exception to it if property is occupied by the owner for the purpose of the business or profession carried on by him and profit of such business chargeable to income tax, than the same is not chargeable to tax. So conditions which should be seen
1. Property consisting of building may or may have some land attached to it but not vacant plot.
2. Ownership of the property as subletting income will be covered under the Income from other source.
3. Same is not occupied by owner for his own business or profession reason this exception could be giving rent to own self or notional rent.
In my opinion in your case you are have constructed building, you are the owner of the building and you are not occupying for carrying on any of your business. So income from letting to students is income from HP.
To clear the confusion whether buisness of letting is to be considered as business income as decided in case of National storage (P) Ltd (1963) 48 ITR 577 Bom, it was held - house owing however profitable, is neither trade nor buisness for the purpose of the act. and same is income from Income from HP.
As this is your let out property so the restriction of interest claim to 1,50,000/- not apply so you can claim actual deduction even if it exceeds the said limit.
Income from selling flowers can be your income from business or income from other source.
Warm regards
Any Income drived from House Property is taxable under HPI Head in all case..., although if property is in business or pofessional use, then the same has no consuderation...
In your given situation, part of the house income shall be taxed under HPI Head and rest is Agriculture Income has no treatment except for tax computation (if it is Rs. 5000 or more)...
I don't have much idea regarding whether the growing and selling of flowers will be agricultural income or non-agricultural income but for the case of letting out of House to students will come under Income from House property if the intension is to earn Rental income.It does not matter even if you have the business of letting out houses owned by you. It will be treated as PGBP(Profits & Gains from Business & Proffession) only if the intension behind giving letting out is not earning rental income but to give support to any other business like in your case it may be you are running a tution centre or school and to increase your earnings from there, you are letting out so that more students join as getting accomodation facilities.
Freinds i have a doubt i.e. Flowers Income may not come under definition of agriculture income because it is cultivated within muncipal limits
pls resolve
CAclubindia
