Income from machinery, plant or furniture, belonging to the assessee and let on hire, is chargeable as income from other sources, if the income is not chargeable to income-tax under the head "Profits and Gains of Business or Profession".
In case any such assets are hired out as a part of the business activity carried on by the assessee or as commercial assets belonging to the assessee, the income derived therefrom is assessable as business income under section 28 and not as Income from other sources under section 56.
1. Income from Composite Letting of Machinery, Plant or Furniture and Buildings [Section 56(2)(iii)]:
Where an assessee lets on hire the machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, known as composite rent, if it is not chargeable to income-tax under the head "Profits and Gains of Business or Profession", shall be chargeable as income from other sources.
2. Deductions permissible from Letting Out of Machinery, Plant or Furniture and Buildings [Section S7(ii) and (iii)] :
The following deductions are allowable:
(a) Current repairs, to the premises held otherwise than as tenant.
(b) Insurance premium against risk of damage or destruction of the premises.
(c) Repairs and insurance of machinery, plant or furniture.
(d) Depreciation based upon block of assets,
in the same manner as allowed under section 32 in the case of Income from Business and Profession subject to the provisions of section 38 i.e. if it is partly let and partly used for own purpose, deduction of expenses (including depreciation) shall be allowed to the extent it is let out.
(e) Any other expenditure:
Any other expenditure, not being a expenditure of a capital nature, laid out or expended wholly and exclusively for the purpose of making or earning such income can be claimed as a deduction. |
