OPINION: Real versus ostensible income from property.

from BUSINESS LINE, September 27, 2008 Fixing the assessable income from property which is let out is a perennial problem for the tax administration, especially when the tenant subleases it for a rent higher than what he pays to the original lessor. Will it be correct to assess the owner-lessor on the gross income that the tenant gets by subletting it? Annual value Bhagawani Devi owned a house in Ranchi. She let out the first and second floors of the building to Canara Bank for a rent of Rs 1,06,800. The ground floor portion was let out to a firm in which she was the partner for Rs 4,800.

In computing the total income from property, the assessing officer (AO) determined the …