Income from mobile towers.
Mohammed Vaid
(Querist) 10 November 2013
This query is : Resolved
Hi,
Our society has installed 2 telecom towers on our society terrace. Our tax consultant has informed us that income from telecom towers are flatly taxable after 30% of standard deduction.
Is there anyway to save tax on this income? Please advice.
Advocate M.Bhadra
(Expert) 10 November 2013
Rental from mobile tower:
Rental from mobile tower is taxable under the head Income from House Property. Since it is considered as house property it is eligible for standard deduction u/s 24(a) @30% of the rent.
Section 24 in The Income- Tax Act, 1995
Deductions from income from house property
(1) Income chargeable under the head" Income from house property" shall, subject to the provisions of sub- section (2), be computed after making the following deductions, namely:-
(i) 2[ in respect of repairs of, and collection of rent from, the property, a sum equal to one- fifth of the annual value;]
(ii) the amount of any premium paid to ensure the property against risk of damage or destruction;
(iv) where the property is subject to an annual charge 4[ (not being a charge created by the assessee voluntarily or a capital charge)], the amount of such charge;
(v) where the property is subject to a ground rent, the amount of such ground rent;
(vi) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital.
Mohammed Vaid
(Querist) 10 November 2013
Our income tax consultant is saying that this income comes under Income from other sources. Can you help me in understanding how to save tax on the same by any means or investments?
Rajendra K Goyal
(Expert) 10 November 2013
The rental earned from Mobile Towers is taxable under the head Income from House Property. Under this head, it is also eligible for standard deduction u/s 24 (a) @ 30 % of the rent. In case the society has borrowed capital to construct any infrastructure to support the Mobile Towers then a proportionate deduction can be claimed for interest paid on the borrowed capital. The rent payer should
deduct tds.
Please refer to following link also for decided case:
http://www.lawyersclubindia.com/judiciary/Rental-Income-from-letting-out-of-terrace-is-to-considered-as-income-from-house-property-subject-to-deduction-under-sec-24-3524.asp#.Un9Yd-KLq_I
ajay sethi
(Expert) 10 November 2013
if you want a second opinion raise query in CA club india .com
R.K Nanda
(Expert) 10 November 2013
consult tax lawyer.
C. P. CHUGH
(Expert) 10 November 2013
Dear All,
Before we jump to the conclusion,let us first under stand the query and the query is :
"Our society has installed 2 telecom towers on our society terrace. Our tax consultant has informed us that income from telecom towers are flatly taxable after 30% of standard deduction.
Is there anyway to save tax on this income? Please advice."
Let us first under stand as per law what is income from house property. Section 22 of the act defines income from house property as under :-
C.—Income from house property
Income from house property.
22. The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property".
To claim income under the head, income from house property it is pertinent to note that such income should be earned from land or building owned by the assessee.
Now in this case income by installation of tower by the society could be termed as income from house property provided those towers are installed at the terrace of the premises owned by the society itself.
Secondly it should be kept in mind that income of the society is taxable at flat rate and deductions under chapter VIA are not admissible in case of persons other than Individuals and HUF.
