plz solve this income tax

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Guest

Case 1: Mr. X owns a BUILDING and gives it on lease (which is Mr. X's business) to Mr. Y. Now, Mr. Y uses it for residential purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 2: Mr. X owns a BUILDING and gives it on lease (which is NOT Mr. X's business) to Mr. Y. Now, Mr. Y uses it for residential purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 3: Mr. X owns a BUILDING and gives it on lease (which is Mr. X's business) to Mr. Y. Now, Mr. Y uses it for commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 4: Mr. X owns a BUILDING and gives it on lease (which is NOT Mr. X's business) to Mr. Y. Now, Mr. Y uses it for commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 5: Mr. X owns a Machinery (or say Car i.e. any other asset other than building) and gives it on lease (which is Mr. X's business) to Mr. Y. Now, Mr. Y uses it for non-commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 6: Mr. X owns a Machinery (or say Car i.e. any other asset other than building) and gives it on lease (which is NOT Mr. X's business) to Mr. Y. Now, Mr. Y uses it for non-commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 7: Mr. X owns a Machinery (or say Car i.e. any other asset other than building) and gives it on lease (which is Mr. X's business) to Mr. Y. Now, Mr. Y uses it for commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

Case 8: Mr. X owns a Machinery (or say Car i.e. any other asset other than building) and gives it on lease (which is NOT Mr. X's business) to Mr. Y. Now, Mr. Y uses it for commercial purposes. Give the depreciation treatment for Mr. X (i.e. eligibility to claim depreciation, Rate, income assessable under which head etc.).

(PLEASE MAKE REFERENCE TO APPLICABLE CASE LAWS, SECTIONS , RULES ETC. IF POSSIBLE)

Replies (18)

raman jot

ca final

106 Points Joined November 2010

As per my view,

1. x claims dep at 5% income taxable under pgbp

2. no dep, taxable under h.p

3.x claims dep at 5% income taxable under pgbp

4. no dep chargeable under h.p

5.x claims dep at 15% income taxable under pgbp

6. x claims dep at 15% taxable in other sources

7.x claims dep at 15% income taxable under pgbp

8. x claims dep at 15% taxable in other sources

Guest

1. x is eligible for deprication 5 % business and prof.

2.not eligible for dep, head : house property ,

3. x is eligible rate of dep. 5%, business and prof .

4 x is not eligible for dep , house property , standard decudtion of 30% should be claimed

5. x is eligible for dep. business and prof . 15%

6. x is eligible for dep. other source of income 15 %

7. x is eligible for dep . business and prof . 15%

8. x is eligible for dep . other source of income 15 %

but not everyone is agree to me raman there answer to this is as follow need u r advice :_

If building is let out whther or not its u r business activity of letting out , it wil lbe charged under 14 as it is sepcific section for income from house property , except when it is let out for purpose out facilitating business ( example of TATA steel given by nitin sighal above).

hence i too agree tat in first 4 cases there is no depreciation....

@ ramsinghania , u asked the relevance of" builing used for res pupr 5% and other purpose 10% in FA.....etc"

a company owns a building it is using it for residential purpose of its director -- dep 5%

company using it as a factory -- dep 10%

next when comes to leasing ( very importnant i feel)

i couldnt read all the judgement notes posted by u guys,

As per some decided case laws judgement tat i have read from t.n.manohrana for nov exam page 285 4th point under heading case laws

cit vs madan @ co --higher rate is available for vehicle running on hire,running on hire neednot be assesee's own business. assessee carrying on lease businessgives on lease which r run on hire higher rate eligible.

cit vs goodwill india ltd-- merely because lessor lease it out to lessee higher depreciation canot be availed , but it would be available if lessee uses the vehicle for running on hire. the inference is that vehicla run on hire would depreciate faster

so from the above points which i read from my book i inferred tat end use has relevance when it is leased....

if its assees business of letting and let out for commercial use -- higher rate

if its not assees business and let out for commercial--- higgher rate

if its assees business n let for non commercial purpose-- low rate

if its not assees business n let out for commercial purpose-- low rate

I welcome for comments on my answer...

Guest

Originally posted by : raman
	As per my view, 1. x claims dep at 5% income taxable under pgbp 2. no dep, taxable under h.p 3.x claims dep at 5% income taxable under pgbp 4. no dep chargeable under h.p 5.x claims dep at 15% income taxable under pgbp 6. x claims dep at 15% taxable in other sources 7.x claims dep at 15% income taxable under pgbp 8. x claims dep at 15% taxable in other sources

fully agree with raman

Guest

even i had given the same answers ...BUT THE QUESTION IS ........IF THE COMPANY EVEN GIVE A BULIING ON RENT ITS SUPPOSE TO BE CHARGABLE UNDER HOUSE PROPERTY

CONFUSED ..............REGARDING THAT

Guest

Originally posted by : ritika
	Originally posted by : raman As per my view, 1. x claims dep at 5% income taxable under pgbp 2. no dep, taxable under h.p 3.x claims dep at 5% income taxable under pgbp 4. no dep chargeable under h.p 5.x claims dep at 15% income taxable under pgbp 6. x claims dep at 15% taxable in other sources 7.x claims dep at 15% income taxable under pgbp 8. x claims dep at 15% taxable in other sources fully agree with raman

bt i have read the main conversion also in which u all had discussed that in no dep in case in 1 nd 3 rd also.. i will go through the cases nd then only say...

by the way do u remember all these cases???

Guest

THE POINT GIVEN BY THEM ARE :-

The the decisions of cases being discussed by us is as follows:

Case 1 to case 4 : No depreciation to lessor, Income u/h House property

Case 5: 15 % depreciation to lessor, incoem u/h PGBP

Case 6: 15 % depreciation to lessor, income u/h Other Sources

Case 7 : 30% depreciation to lessor, income u/h PGBP

Case 8: 30% depreciation to lessor, income u/h Other Sources.

I DNT AGREE TO THEM , EVEN IF U CAN TAKE THERE VEIW POINT OF U

FIRST 4 NO DEPRICATION , WE CAN CLAIM STANDARD DEDUCTION AT THE RATE OF 30 % IN HOUSE PROPERTY

BUT LAST 4 CASES THERE SHOULD BE A DEPRICATION AT THE RATE OF 15 % ONLY

Guest

NO I DNT REM ALL THE CASES

Guest

but i didnt understood that if a is engaged in the business of leasing hw is it treated as house property/???

Guest

MEANS U DO AGREE WITH RAMAN ANSWERS

Guest

ya i do agree. as i didnt understood that if a is engaged in the business of leasing hw is it treated as house property/??? i will go through these cases..

Guest

THE MADRAS HIGH COURT AND DELHI HIGH COURT HAD GIVEN THE CONRARY DECISION ON THAT , AND AFTER WARDS THERE IS A AMDEMENT MADE IN THAT

EVEN ANY BULIDING IS GIVEN ON RENT ITS CHARGE TO HOUSE PROPERTY , suppose a construcion comapnay made flats and they are unable to sale few flats and given on rent , though they held the flats under the head stock in trade , the rent received is going to charge under the head house property not under the head business and professing

unless and until its not directly releted to business its not going to charge under busi and prof

but the matter we discuss over there first is of machincery and cars then we came on to house property

Guest

i m even not sure , though i had given those answers but i think in first four cases no deprication is allowed

Guest

but last four i m sure that its going to be 15 % only ,

just not sure about 1 and 3

Guest

rem. procedure part is very imp in income tax ..................