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akanksha (CA Final Student) (325 Points)

03 June 2014

Hello One of our client is owning a bunglow registered in his name. The bunglow used to have ground Floor Only. Recently a new first floor was constructed by the client taking a loan of Rs 1200000 on the property. Now the Client is living on the first floor. Now my question is can the client sale/gift only the ground floor to its HUF? If yes , then what will be the tax implications in case of a) Sale b) Gift and whether the client can continue to claim interestt deduction in house property as first floor is self occupied? Thanks

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7 Replies

akanksha (CA Final Student) (325 Points)
Replied 03 June 2014

Hello One of our client is owning a bunglow registered in his name. The bunglow used to have ground Floor Only. Recently a new first floor was constructed by the client taking a loan of Rs 1200000 on the property. Now the Client is living on the first floor. Now my question is can the client sale/gift only the ground floor to its HUF? If yes , then what will be the tax implications in case of a) Sale b) Gift and whether the client can continue to claim interest deduction in house property as first floor is self occupied? Thanks

akanksha (CA Final Student) (325 Points)
Replied 03 June 2014

Hello

One of our client is owning a bunglow registered in his name. The bunglow used to have ground Floor Only. Recently a new first floor was constructed by the client taking a loan of Rs 1200000 on the property. Now the Client is living on the first floor.

Now my question is can the client sale/gift only the ground floor to its HUF?

If yes , then what will be the tax implications in case of

a) Sale

b) Gift

and whether the client can continue to claim interest deduction in house property as first floor is self occupied?

Thanks

Suraj (Service) (260 Points)
Replied 03 June 2014

Dear akansha, Its better to show gift rather sale if property because now gift received from any member yo huf will be considered exemt by vitue od amendment in sec 56.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 03 June 2014

@ suraj..... i dont any amendment on sec. 56 regarding gift to huf. though there has been amendment in sec. 56 in FA, 2013 but the amendment states that if any property is transfered to individual or huf for inadequate consideration, where the diff. between stamp duty value and consideration is more than 50000 then such diff. shall be taxable in the hands of individual or huf under the head "income from other sources"

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 03 June 2014

akansha.. i have not come to any solution to your query exactly but there are two points for your consideration in this regard. first, partial partition is not recognised under income tax act or wealth tax act. second,according to sec. 64(2) if individual trf. any property to huf otherwise than of adequate consideration then income from such property shall be clubbed in the hands of individual.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 03 June 2014

so reading the two points together i dont see any chance of gifting the property to huf. its better to tef the property through sale for adequate consideration.