Income from rentals

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A Enterprise dealing real estateactivities  enters agreement with owners of Land  for development of residential building on such land. After development the developer company let out the building.  The developer company have all legal ownership rights on such buildings.

 

Will the Income (i.e., Rent  received) from  let out of properties be taxable  under the head of Income from House Property or Profits and Gains from Business or Profession.

Replies (3)

I think under Income from House Property since it is let out. But if the business of the developer is to give houses on rent instead of selling them, then under PGBP

 

CONDITIONS NECESSARY FOR TAXING INCOME
FROM HOUSE PROPERTY
These are:
• The property should consist of any building or land appurtenant thereto  : - Satisfied
• The assessee should be the owner of the property  : - Satisfied
• 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.  : - Satisfied
 
In case provided by you all the three conditions are satisfied and hence income from letting out of this property will be taxable under income from house property.
 
This can not be treated as a business income because the enterprising is engaged in real estate activities and in general parlance real estate activity does not include leasing of property

 

Thanks Sankalp for a very crystal clear explanation.

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