QUERY:One of the Company Assessee has factory building at Gurgaon and it is let out on a monthly rent of Rs 500000/- PM.The Company has no other income apart from the above rent.
1. May this income be returned as Income from Business or Profession
2. Income from other sources ?
3. Or it would be Income from House Property ?
What will be treatment for Unabsorbed Depreciation if the answer will be 2 or 3 from the above.
REPLY: The rental income in the given case will be chargeable under the head income from House property as it is only the factory building which has been given on rent. As regards unabsorbed depreciation for earlier years is concerned it is stated that same becomes part of current year’s depreciation only in a case where there are computation under the head business and profession as per section 28 of the Act. In case there is no business at all and no computation under the head profits and gains, unabsorbed depreciation will not be available for set off against income under other head as same can not form computation of profit in terms of section 28. Firstly there should be applicability of section 32(1) to claim set off of unabsorbed depreciation against income under other heads. So, it is necessary that the assessee should have some business income to claim set off of unabsorbed depreciation.
QUERY: Please advise me in case of a Charitable Trust ( Registered U/s 12 AA of the Income Tax Act enjoying Exemption U/S 11 ) running a Hospital and school and also one chemist shop inside the hospital and a books and stationery shop inside the school.Running of Chemist shop and books/stationery shop are business incidental to main objects of the trust. Whether this trust is Required to file Tax Audit Report in form No. 3CD besides Audit Report in Form No. 10B. Please guide.
REPLY: The rental income in the given case will be chargeable under the head income from House property as it is only the factory building which has been given on rent. As regards unabsorbed depreciation for earlier years is concerned it is stated that same becomes part of current year’s depreciation only in a case where there are computation under the head business and profession as per section 28 of the Act. In case there is no business at all and no computation under the head profits and gains, unabsorbed depreciation will not be available for set off against income under other head as same can not form computation of profit in terms of section 28. Firstly there should be applicability of section 32(1) to claim set off of unabsorbed depreciation against income under other heads. So, it is necessary that the assessee should have some business income to claim set off of unabsorbed depreciation.
QUERY: A & Co Ltd is having 1000 shares of X Ltd in its investment account purchased @ Rs 10/- each in the year 2005.The same is sold in 2013 @ Rs 10/- whereas the breakup value is Rs 11.20P. What is the tax implication in the books of A & Co Ltd.
REPLY: Capital gain in the case of A & co. will be determined on the basis of actual sale consideration, which is Rs. 10 per share notwithstanding that break up value is higher. Indexation benefit will also be available and there would be long term capital loss in the given case.
Sec 10AA) along with return of income.
I am having one doubt relating to sec 37 of Income Tax 1961. Interest paid on service tax of past 5 year service tax due short levy, non deduction, late deposit etc, is this allowable under Income tax act.
Service tax payable as well as interest on delay is deductible business expense. Penalty, however, is not deductible.
Two Pvt Ltd company made a joint venture to execute a govt project. After the completion of the project the joint venture was duly assesed Now both pvt ltd company distribute the joint venture profit as per the agreement. I just want to ask that in which head that distrubuted profit will accounte for whether income of the company or its reserve parts. & if it will be treated as income whether it will be a exempted income.
In terms of Proviso to section 86 of the Income Tax Act where tax has been paid by the Association of Persons at the maximum marginal rate or at a rate higher than the maximum marginal rate, the share of a member therein shall not be included in his total income.In the given case tax would have been paid by the JV at maximum marginal rate and therefore, share of income will not be includible in the income of the member.
A HUF is engaged in trading of shares and securities and is having following income
1. Income from delivery based equity trading (Treated as Business Income in ITR)
2. Income from Commodity Trading (MCX) – (Treated as Income from Speculative Business in ITR)
3. Income from trading in Equity Futures – (Treated as Income from Speculative Business in ITR)
4. Income from Rent on sub-let (property is in the name of HUF on Salami system) – (Treated as Business Income in ITR)
5. Interest Income – (Treated as Income from Other sources in ITR)
6. Dividend Income – (Treated as exempt income in ITR)
HUF has b/f business losses of rs. 30000 and b/f losses from speculative business 125000
Query :
1. Whether the HUF has rightly treated the income under different heads as said above
2. Currently HUF is planning to raise funds from members of HUF and give loan to a third party against interest
3. Under which head such interest income is to be treated in the books (Business / Other Sources)
4. Whether interest paid to members is allowed as deduction against interest income (no interest has been provided on loan from Karta in previous year)
5. Whether this interest income is allowed to be set off against above brought forward losses ….
REPLY:
Categorization of income appears to be ok except that income from sub-letting can not be business income. It can be income from other source. Brought forward business loss can be set off only against business income in subsequent years. Interest paid on loan taken from members for giving loan to third party will be deductible. Interest income will be chargeable under the head income from other sources as financing is not a regular business in case of HU F.
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