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H.P. or Other source

C.Balaji (Learner) (1867 Points)

05 February 2010

Dear Friends..

Mr.A - owner of land he leases the land to Mr.B for 20yrs- B Builds a building on land and let out to C....

What is the tax treatment in the hands of Mr.A and Mr.B???

In the hands of A and B... H.P or Other Source income...

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11 Replies

Sunil Mall (Assistant Manager) (49 Points)
Replied 05 February 2010

Mr.C.Balaji

Mr.A will pay tax on the amount of lease rent recd by him from mr.B

Mr.B will pay tax on the amount of rent recd by him from mr.C

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Atul h Kaulwar (Article) (91 Points)
Replied 05 February 2010

Tax treatment in the hands of Mr.A owner of land

Income from leases rent of the land is not the income from House Rent

Therefore it is taxable as Income from Other Source.

Tax treatment in the hands of Mr.B

Under Section 269 UA(f) if the person acquirer right in a building on lease for a term of not less than 12 years, then he is deemed owner of the property.

Therefore B will be deemed owner of the property thus it is taxable as Income from House Property.

ashish gupta ( student) (1922 Points)
Replied 05 February 2010

Agree with Atul

Amir (Learner) (4016 Points)
Replied 05 February 2010

Dear Balaji,

Mr. A = income will be taxable under Other sources

Mr B = House Property

My Friend, Atul - the concept of deemed owner is not applicable in this case, because B has acquired rights in Land & not in building..

AHAMED. B (3 'C' - Final) (273 Points)
Replied 05 February 2010

I dono sec.269 UA(f).... But Amir is ri8, in saying that Mr.B has taken lease on land and not the building, except on his conclusion.. Both wil be taxable under Other Sources in their respective hands.. Since deemed ownership concept fails, it cant be taxed under IHP.. Its like sublet income and taxable under IOS only......

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Amir (Learner) (4016 Points)
Replied 05 February 2010

Dear ahmed,

In case of B, income shall be taxable under House Property beacuse of clear language of sec 22 -

"The annual value of property consisting of any buildings or lands appurtenantthereto................. "

Brother, I think only building is sufficient for Sec 22

Satish shastri (CA final Student) (91 Points)
Replied 06 February 2010

I agree with Amir, Mr. A ----- Other Income Mr. B ----- House Property

Satish shastri (CA final Student) (91 Points)
Replied 06 February 2010

I agree with Amir, Mr. A ----- Other Income Mr. B ----- House Property

Ashutosh mishra (CA Final & Under Article) (62 Points)
Replied 06 February 2010

Mr. A's Income will be chargeable under the head Income From Other Sources.

While Mr. B hold the land more then 12 years so he will be The deemed owner of the Property. Therefore his Income will be chargeable under the head Income From House Property.

C.Balaji (Learner) (1867 Points)
Replied 06 February 2010

Dear friends....

In the present case Mr.B died before completion of 10 years of holding the land....his legal heir wants to cancel the lease deed and return the land back to Mr.A.... Legal heir C receives some amount from A....What will be the tax treatment and since it does not cross 12 yrs will the amount received by C during part of that year will be charged in IFOS????