Please Help: Income Tax
Posted Date : 23-Sep-2013 , 02:52:01 pm | Posted By: CA Nagam Devi Kumar
Category :
Income Tax | Answers :
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If assessee is having own building for running their own business and part of the area say 40% plinth area is given on rent to others, is the income from house property or business income keeping in view of incidental and ancillary to the business because tent business also the same. If it comes under house property, proportionate municipal taxes should be disallowed in business and can be claimed under property income. in such a case is it necessary to add back the depreciation on building proportionately to the let out area, because the assessee is claiming depreciation on the own building
please advice me in this regard |
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Answers:
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 Answer by: SUBHASH KUMAR JHA |
| According to section 23 of income tax act any income will be chatged to tax under the head house property if following condition will satisfy
a.Assets must consist of land and building appurtanent there to - u r satisfying this one
b.assessee must be owner of propertr - u r satisfying this also
c.Assessee must not use the property for the purpose of business carried on by them - in the given case u r not using 40% of the property for the purpose of your business - hence u r satisfying this one also
so finaly your rent income will taxed under the head house property
Once your rent income will be taxed under H.P.u will get deduction of 40% of municipal Tax paid andf standard deduction u/s 24A @ 30% , not of any expenses like Depreciation , Repair etc.
so while u will compute income from PGBP u will be allowed deduction of 60% of municipal tax paid and depreciation only to the extent of 60% of Property
keep in mind that there is only three tax which is not allowed in PGPP - Income Tax , Wealth Tax , Fringe Benifit Tax
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