House Property or Business Income – Rayala Corporation Vs Assistant Commissioner of IT

Updated on: May 23rd, 2024

|

2 min read

Facts of the case

  • The taxpayer is in the business of renting their properties.
  • It is in receipt of rental income from such renting business.
  • It has been offering such income under the head “Income from Business”.
  • However, the tax authorities are of the view that such income must be offered as “Income from House Property”.

Question that needs to be answered

A taxpayer in the business of renting of property should offer income as “Business Income” or “Income from house property”?

Supreme Court observations

  • Relied on its own earlier decision in the case of Chennai Properties and Investments Ltd. v. Commissioner of Income Tax [2015] 373 ITR 673 (SC). Here the court had observed that if a taxpayer is having his/her house property and as part of his/her business he/she is giving the property on rent, the rental income received should be treated as “Business Income” because the taxpayer is having a business of renting his property.
  • Based on the above, the court, in the case of Rayala Corporation, ruled that income from house property received where the taxpayer is into the business of letting out property will be taxed as “Income from Business” and not as “Income from House Property”.

Public Discussion

Get involved!

Share your thoughts!

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption