Income from renting out property cannot be claimed as business income

To classify income from letting out property as business income, the taxpayer needs to exploit the property commercially by providing furniture, facility management, amenities and security

Treatment of rent has been a common point of dispute between the income-tax department and taxpayers. An individual would prefer to show rent as business income, which allows him to deduct all the expenses incurred to maintain the property, claim depreciation and don't need to pay notional rent when the property is not let out. All this also means revenue loss for the government. The I-T department, therefore, scrutinises every such case in detail to dissuade taxpayers from claiming it as business income.

The disputes also occur as the I-T Act doesn’t provide definite guidelines on the treatment of rent. “Assessees