SECTION 38 BUILDING, ETC., PARTLY USED FOR BUSINESS, ETC., OR NOT EXCLUSIVELY SO USED

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It relates to the deductions for structures, etc., that are partially or not entirely utilised for business. The provisions of this section are summarized in the following two sentences:

1. Deductions for real estate are utilised for a business or profession but also partially used by the assessee for his private abode.

2. When the assessee utilises his property (building, plant, furniture, etc.) other than strictly for his trade or business.

Deductions relating to real estate used for business or profession when the assessee uses a portion of the space for his lodging:

• The Assessing Officer will determine the deduction for rent paid as a tenant, including the cost of repairs to the premises, by Section 30(a) (i)[1], taking into account the proportional annual value of the portion of the premises used by the assessee for his business or profession. If any repairs are necessary, the deduction will also be proportional to the portion of the premises used by the assessee for those purposes.

• The amount determined by the Assessing Officer concerning the proportional to such part of the premises which is used by the Assessee for his business or profession shall be the deduction for the amount paid on account of land revenue, i.e. local rates or municipal taxes, under Section 30(b);

When a structure, piece of furniture, plant, or piece of equipment is not used exclusively

When a structure, piece of furniture, or piece of equipment isn't utilised only by the assessee for the conduct of his business or profession, the assessee may deduct:

1. The sum paid by the assessee on account of repairs to the premises other than as a tenant under Section 30 (a) (ii)

2. The sum paid by the assessee as a premium for insurance under Section 30 (c) against the risk of damage to or destruction of his premises

3. The sum paid by the tenant for required repairs to equipment, furniture, or other items used in his business or trade is provided under Section 31(i)[2]

4. The sum paid by the assessee as an insurance premium about the risk of damage or destruction of his equipment, plant, or furniture employed in his trade or business under Section 30 (ii);

5. Depreciation for the block of assets under Section 32 (1) (ii)[3].

The Assessing Officer will determine a fair percentage concerning the user of the building, plant, furniture, or machinery for the business or profession before allowing a deduction for the aforementioned items.

[1] Indian Kanoon (Section 30 of Income Act Tax)- https://indiankanoon.org/doc/454306/ [2] Indian Kanoon (Section 31 of Income Act Tax)- https://indiankanoon.org/doc/677281/ [3] Indian Kanoon (Section 32 of Income Act Tax)- https://indiankanoon.org/doc/179995/