An owner of a building has agreed to rent out his builidng to an Insurance company for a monthly rent of Rs 2.5 lakhs. The insurance company has desired that the intrior of the building i.e, interior decoration, carpenrty, electrical fittings, sitting arrangements etc. be made according to their specification and has made separate agreeement with the landlord for this which says the cost reimbursemened on actual basis. The question is whether the cost reimursed by the insurance company should be a part of the taxable value or it should be costrued that lndlord is acting as a pure agent and hence the cost reimbursed to him should be excluded from the taxable value?
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Pure agent-query regarding
Replies (2)
Bills should be obtained in the name of insurance company inorder to claim exemption as pure agent
The fit outs liability is in question. A number of issues are tobe decided in this reagrd.
1) Whether to pay the ST on rent itslef under ptroest as the matter is before the SC.
2) The interiors which form part of immovable property would in my opinion be includes with rent.
3) The fit outs which are movable would be a subject matter of VAT as the right to use goods is trasnferred to the buyer by the owner of thye movable property.
4) Unless the Valuation rules are held tobe ultra vires there may notbe defense on non inclusion and calling ti a reimbursment.Not at all advisable.
Warm Regards
Madhukar
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