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TMI BlogIncome from Renting under ‘House Property Income’ or ‘PGBP’X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from Renting under ‘House Property Income’ or ‘PGBP’ - By: - Vivek Jalan - Income Tax - Dated:- 8-11-2024 - Income from rental property has different connotations depending on whether it is treated as house property or business income Rental income from a property could be treated as income from House Property and/or income from Business and Profession. If the property income is declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business income, then the owner can claim a tax deduction on actual expenses. Property income is considered as income from house property if the property is not used by the owner for business or professional purposes. An individual would prefer to show rent as business income, which allows her/him to deduct all the expenses incurred to maintain the property, claim depreciation and not pay notion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rent when the property is not let out. Whereas, Taxability as House Property provides a standard deduction which is limited to 30% of the income along with a deduction on interest paid on borrowed capital for the purposes of acquisition, construction, repair, reconstruction, (subject to limitations provided under the Act). Taxpayers will always go to option of including rental income as busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income which will in turn mean revenue loss for the government. The Finance Act (No 2) 2024 inserted 3 rd explanation to Section 28 of Income tax Act as follows, w.e.f. 01-04-2025 - 17 [Explanation 3. It is hereby clarified that any income from letting out of a residential house or a part of the house by the owner shall not be chargeable under the head Profits and gains of busin ess or professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and shall be chargeable under the head Income from house property ] However, for the period before this, the debate continues. In the case of NATIONAL LEASING LIMITED, NATIONAL REALTY PVT. LTD., NATIONAL REALTY PVT. LTD. [FORMERLY, NATIONAL LEASING LTD.] , VERSUS THE ASSISTANT COMMISSIONER OF INCOME, CIRCLE 3 (6) , MUMBAI, THE DEPUTY COMMISSIONER OF INCOME, CIRCLE 5 (2) , MUMBAI, THE I.T.O. WARD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3 (5) , MUMBAI. - 2024 (10) TMI 1209 - BOMBAY HIGH COURT the appellant claimed that such income from renting property should be classified under Income from Profits and Gains of Business or Profession rather than Income from House Property . The Hon ble High Court gave various principles for determining the same 1. Primary business activity to be seen - The nature of the business and the main obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective as defined in the Memorandum of Association should be seen. As per the Supreme Court's judgment in M/S CHENNAI PROPERTIES INVESTMENTS LTD VERSUS THE COMMISSIONER OF INCOME TAX - 2015 (5) TMI 46 - SUPREME COURT , when leasing properties is the primary business activity, such income should be classified as business income. The SC judgement in the case of EAST INDIA HOUSING AND LAND DEVELO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PMENT TRUST LIMITED VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL - 1960 (11) TMI 7 - SUPREME COURT is distinguished. 2. Principle of consistency to be seen - The principle of consistency as established in RADHASOAMI SATSANG VERSUS COMMISSIONER OF INCOME-TAX - 1991 (11) TMI 2 - SUPREME COURT is important. Incase the department had treated similar income as business income for many previous assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years, and there is no change in the business, the stand cannot change now. - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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