Income - assured return on under construction property

the 4.5 lacs payment p.a. What type of payment is this?  Can u pls elaborate it a little.

Any update? Waiting for your Help..  Please HELP...

Hi... Thanks Gridhar ji for your reply... 4.5 lac/ann is Assured Return given by Builder on under construction propoerty till possession ... It will be sort of Intrest income...

Since the property is in your daughter's name so ultimately the income would get taxed in her hands only.  You need to file ITR-1 for thsi purpose.

The other way round would be to put the name of yourself as also on the property, since I suppose that you are a senior citizen so you would get a higher exemption slab while taking the interest income in your income and your daughter being a women citizen would also get the benefit of higher tax slab.

Please communiacte with your lawyer and CA regrds the adding the name.

Thanks Giridhar ji for your reply and advise...

Having property on someones name is just a prima facie evidence as to the ownership, we primarliy have to see who has made the payment, since you have made the payment you are the owner of the property and consequently this income is actually yours . Although if shes a major then you can gift your share to your daughter and then she will be the owner to the extent of 60% (clubbing provisions shall not apply), remaining 40% share is of husband and even if he gives it to her then clubbing provisions shall apply and 40% of the income will have to be clubbed in his income in that case aswell. That mean to say in both the cases income to the extent of 40% is attributable to husband only

Further as per my understanding of S. 2(28A) which defines the meaning of the term interest, this assured return is not in nature of interest to you. Interest is in respect of money borrowed or debt incurred.

"interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised "

But this amount which you have paid is not a borrowing or debt. They are not going to repay you the loan/debt/borrowing. Neither they have taken it in the 1st place. They are just receiving the installments

Will it be possible for you to show us the agreement?

Further in my limited knowledge such a payment is not covered under TDS provisions. But I know from the offers I read that tax is being deducted at source but they are prolly doing it to be on safe side lest they could be in trouble(if tax was required to be deducted)

Further check for the agreement with the seller in respect to the assured return, as to who is going to receive this income. Since the TDS certificate will also be in their name so in case of claiming the TDS & getting TDS refund(if any) you can face some problems. Her husband should make a declaration that he should be entitled to 40% of the asssured return so there is no issues while claiming the refund or deduction of tax in the ITR, Similarly it should also be declared that only 60% of the assured return accrues to you/your daughter (depending upon your course of action) so the entire TDS certificate not be in her sole name

But as far as TDS certificate is concerned I request that you take necessary steps by giving a declaration of income to the builder. See rule 37BA in this regards

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Even if there is TDS then it should not be much of a problem as if assessee is liable to advance tax then he can claim it over there or if refund is admissible then refund can be granted. Or you could give certificate of no/lower deduction of tax u/s 197

Let them deduct it, they also want to be on safe side and till we have any judgement I think its fine being prudent.

Mr Z we need to go by the definition as laid down in law which says that only the owner of house property is entitled to claim all the tax benefits and is assessed to tax from the income arising from house property.

since the property is in the name of me YAsh's daughter so shw alone would be entitled to claim the benefits and get assessed to income from HP.

I beg to differ, When assessment is done by AO they have to see who is the person who has actually finance the property. There have been so many case laws on this

I am not denying your view,please substantiate it for me 

Further I would like to add Benami transactions in this

Benami transactions was very much prevalent in India, it is so even now,In such cases, the property is registered in someone elses name and is financed by someone else

Text from Benami Transactions (Prohibition) Act 

S. 2"(a) benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person"

3. Prohibition of benami transactions- (1) No person shall enter into any benami transaction.

(2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name
of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife of the unmarried daughter.

(3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence
under this section shall be non-cognizable and bailable. 

Further I would like to add that such  under-construction properties are outside the perview of chapter of income from house property