How are you all? I am your friend C. H. Ray Gupta. I hope
you all are doing well.
This is your lecture no. 2. In lecture no. 1, we discussed
about house property.
It was a very interesting topic. I think you were getting
confused and trying to understand it.
But it is a very good thing if you keep trying. Because a
walking man never gives up.
You never give up because you are a man and not an avatar.
Friends, with this, I welcome you to lecture no. 2.
Before we move ahead and cover the topic, let me take a
minute to revise what we had studied in the last lecture.
We had studied, friends, the head of income, a new one,
whose name was income from house property.
You can see it on my screen.
Income from house property, if you have a house, we were
discussing its annual value.
I have not told you what the annual value is yet. I will
tell you when the time comes.
I am just telling you that tax is imposed on the annual
value.
Tax was not imposed on the entire value of that house.
For example, if it was a house worth 5 crores, tax was not
imposed on 5 crores.
But we were imposing some tax on its annual value.
Then we also saw that there were some exceptions that we
were not supposed to impose.
So I remember that I gave you an example of my childhood
friend, Mukesh Ambani.
You may remember that he had 5 offices.
But the business that he is doing with that office, the
value of that office should not be taken in its annual
value.
It should not be included in the house property income.
Then you may remember that I had also told you an example
of DLF.
And I had said that the person's business is to rent a
house.
It will go in his business income and not in the house
property income.
Then we came to the conditions for chargeability.
In conditions for chargeability, we had read that the
associate should not be a tenant.
He should have his own property. He should be the owner of
that property.
After that, we saw that if he uses the property for his
business, then it will not come in the house property
income.
That is the same example of Mukesh Ambani.
After that, we saw the third point, the fourth one, that if
your property is a stock, for example, you are in the
construction line, or your work is to buy a house and sell
it, then it becomes your stock.
And you have to take the annual value of the stock for 2
years, if it is not sold.
And if it is sold, then in the third year, you take its
annual value.
I will tell you how to calculate it.
You take its annual value.
There was some revision, that is why I was going a little
fast.
Today, a new lecture and a new topic.
The name of the topic is Composite Rent.
What is the name of the topic?
The name of the topic is Composite Rent.
What is the meaning of composite?
What do you understand from composite?
Composite means collecting.
Collecting two things.
Sir, collecting two things means composite.
You are talking about composite rent.
So, how to collect two rents?
I did not understand that.
Sir, I did not understand what you were saying.
Sir, are you making us waste our time?
I said, wait.
Brother has come, he will explain.
Friends, composite rent means that, sometimes you must have
heard, that your friend or relative rents a house.
So, he says, I have a rent of Rs. 15,000.
And Rs. 3,000 goes for monthly maintenance.
What did I say?
I said, I have a rent of Rs. 15,000.
And Rs. 3,000 goes for monthly maintenance.
So, how much money will I give to the landlord?
Will I give Rs.
Rs. 3,000?
Rs. 18,000?
Will I give Rs.
18,000 or nothing?
Tell me.
One man is saying that he will not give anything.
Is this how it works?
You should not give anything, but you have to give.
The answer is that,
I will give Rs. 18,000.
Rs. 15,000 is the rent of my house.
And Rs. 3,000 goes for my maintenance.
Like in the flats of the society, a watchman will put you
in maintenance.
Not that watchman, normal watchman.
I understood a little, some are laughing.
So, a watchman will put you in maintenance.
A gardener's service is also given to you.
Lifts also work.
Lift service is also there.
So, all these services also have a cost, friends.
If the lift breaks down in the middle, from where will the
landlord take the money?
He will take it from people like you, from the tenants.
So, that money is in the form of maintenance.
He will take a little maintenance from you.
And in that maintenance money, he will keep giving other
people's salaries.
This happens a lot.
Like in a shopping mall, if you rent a shop, then they do
this, that Rs.
25,000 or Rs.
50,000 is your shop's rent.
And Rs. 5,000 will go for our maintenance.
So, the total rent will be Rs. 55,000.
This is called composite rent.
The cost of two things, or the rent of two things, you give
together, that is called composite rent.
So, composite rent, how to do it in a house property, what
to do with it, this is something to look at.
So, let's go to our slide.
It says that the owner of the property may sometimes
receive rent in respect of the building as well as various
other services.
Like furniture, planted machinery,
I have written an example, that a shopping mall provides
various facilities, like a lift, like securities.
So, all these things, the total that you will give, your
shop's rent, plus the maintenance services of these
services, that will be called composite rent.
That is called composite rent.
Now, let's look at its taxability.
I have made a diagram of the shopping mall.
You will be able to see it.
If you try to see the diagram of the shopping mall
carefully, if you zoom it a little, you will be able to see
that there are shops inside.
See, there are shops inside.
But tell me one thing, the lobby, the cleaning of the lobby
is also done.
Someone must be doing this as well.
He must be the owner of this mall and he will take money
from you.
This is included in the maintenance charges.
So, the rent that you will give, that is the shop's rent
plus maintenance.
Now, how to do its tax treatment?
See, it is a simple thing.
Two things are clear.
One is the shop's rent.
The other is the maintenance.
So, sir, you have been saying since yesterday, that the
rent of the house, the rent of the house, the rent of the
showroom, the rent of the office.
So, this will go to the house property.
We understand this much, that I am giving Rs.
50,000 to that person,
or Rs. 50,000 will go to the house property.
I am talking about the income of the person receiving it.
It will go to the house property income of the owner of the
mall.
And that Rs.
Rs. 5,000, that goes either to the other source's income or
to the income of the business and profession, depending on
the case.
When you look at the case, you will know that it comes
under business or it comes under other allied things.
So, it will go to other sources.
It depends on case to case.
When you go into practical life, you will understand by
looking at the case.
I am not trying to explain anything in this.
When you look at the case, it will be clear to you whom to
take in business.
Is it his business to give such services or is he giving
you the same?
If he is giving you the same, then take it in other sources.
If it is a business, then it is a business profession.
But the Rs.
50,000 that he is taking, that will go to your house
property and it will be taxable.
Keep this in mind.
Now, this is the manner of splitting.
Now, our next topic.
How to split it up?
There are two cases.
Sometimes, sometimes what happens is that things cannot be
split up.
Things cannot be split up.
Sir, what do you do?
Sir, you make me go around a lot.
Listen to me.
Brother will come and explain.
Don't take tension.
Things cannot be split up.
I mean,
In your schools, there must be a science lab or a computer
lab.
So, when a science lab or a computer lab is made, they make
it in such a way that they cannot separate the two services.
Where there is a science lab, they put a tile of the same
height.
So, it cannot be separated.
Suppose, I rent a science lab.
So, how will I separate it?
What is the rent of the building and the service you are
giving me from the science lab?
You know, there is a blackboard.
There is a tile.
So, how do we separate it?
We can take another example of this.
For example, if you go to Bombay in Bollywood, there are
studios there.
Film studios.
For example, there is a studio called Mehboob.
It is a studio of Yash Raj.
So, in the studio, they give you a place for shooting.
Along with that, they also give you services of staff.
Along with that, if a peon or a spot boy comes, along with
that, you can also take cameras.
You get a camera.
You also get lighting equipment.
So, by looking at such cases, you cannot guess how to
separate it.
If you go to Yash Raj, he will say, okay, you can go to the
studio for 10 lakhs per month.
you can use all my things, but how will you separate it?
You will ask him, what is the rent of this, tell me the
rent of this, tell me the rent of this camera, tell me the
rent of this mic, it is not possible.
So in those cases, it is not possible, in those cases, what
will be the income of the person who will pay the rent?
Will he take that thing in the house property? How will he
take it in the house property, when you are not able to do
it separately?
Friends, in that case, it will become the income of PGBB,
means business and profession.
It will be assumed that he has put that thing on rent as a
business, and the rent he is receiving, he is not doing it
in the house property, he is receiving it in the business
and profession.
So his income will be taxed in the head of business and
profession, and not in the head of the house property.
Did you understand?
Like, you will not be able to do it separately, basically
it means that you are not able to do it separately.
This is a studio, for example, and there will be different
services, here there is a camera, this has become our
camera, and here there will be services of peon, this has
become our peon, there will be services of this type as
well.
So when we are not able to do it separately, then how can
we take it in the house property?
And how much should we take? Even if we take it in the
house property, how much will you take?
Even if you take it in the house property, how much will
you take?
Even if you pay 10 lakhs per month on rent, how much will
you take?
You cannot take all of it.
So that is why the government said, don't create such
confusion, show it in the income of business and profession.
Okay sir, the government does good work sir.
Sir, wait for a while, come forward and see what happens in
the income tax.
You will come to know how good the work is and what it is.
Now the second thing that comes in this is that if you are
able to see that you can be separate, how will you be able
to see that you can be separate? I will tell you.
Like for example, I went to take a house on rent from
someone.
That person had to go abroad in some time, he had to settle.
So he said that I have this furniture lying here, you do
one thing, give me a house on rent of 15,000 rupees and
give me 5,000 rupees for furniture, bed, cupboard, etc.
I said, tell me sir, will you make me understand so much
Gujarati that I am on your second hand bed?
Brother, I will give you a house on rent of 15,000 rupees
and all the beds are mine.
Pick it up and sit and leave. I will give you a house on
rent of 15,000 rupees.
Do you understand? And the rest of the furniture is mine.
Later on, if you take all these furniture, then you will
get a house on rent of 15,000 rupees plus 5,000 rupees.
I will tell you later.
If you take this table chair, you took this chair, then a
house on rent of 15,000 rupees plus 5,000 rupees.
Total how much is it?
If you take all these tables and chairs, then you will get
a house on rent of 15,000 rupees.
In the separate apartment case, if I will have a house on
rent of 15,000 rupees, if I will have a table and chair
with the house on rent of 15,000 rupees, then I will get a
house on rent of 15,000 rupees.
The house will be in the income of that person, and the
5,000 rupees will be in the income of the other sources.
What is the problem in this?
Do you understand?
So, this was the concept.
If you want to read it, you can read it.
I will make you read it once.
How to split up?
Read from here.
One second, I will remove it.
Actually, our system is very advanced.
I get it from my head that how to make adjustments.
Read it from here.
Composite rent is received from letting out of the building
and other assets.
And two lettings are not separable.
You cannot separate them.
So, either you can put your rent in the business income or
in the other source's income.
But do not put it in the house property by mistake.
Because you do not know how much is there in the house
property.
So, how will you charge like this?
And another point is that if you are able to separate, like
here, where composite rent is received from letting out of
the building and other assets, and letting is separable,
then income from letting of the building is taxable in the
house property.
Or letting of other assets like furniture, like table
chair, will go to PGPB or other sources like your case.
You will get to know by looking at the case.
You will get to know by looking at the practical life of
the case.
So, this topic was of composite rent.
Our topic of composite rent ends with this.
Thank you very much friends.
We will cover the next topic.