No service tax is to be levied on renting immovable property when sharing profits

Last updated: 27 July 2023
Quick Summary
The CESTAT, Chennai has ruled that service tax is not applicable on income received from renting immovable property if the arrangement is essentially a profit-sharing agreement. In this case, a hotel owner granted rights to another company to operate their hotel, receiving a percentage of operating income. The tribunal found this arrangement to be profit-sharing, not a simple rental, and therefore not subject to service tax.

Court :
CESTAT, Chennai

Brief :
The CESTAT, Chennai in M/S. Hotel Shreelekha Regency Limited [Service Tax Appeal No. 40073 of 2014 dated July 14, 2023] set aside the order demanding service tax on rental property and held that, income received from rent by assessee is not subject to levy of service tax.  

Citation :
Service Tax Appeal No. 40073 of 2014 dated July 14, 2023

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