Capital Gains

This query is : Resolved

CA Smita R Lokapur (Querist)
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29 June 2011 Pls help me out:-

There is one assessee who was tenant in a flat for many years. He transferred the tenancy to his wife's name without consideration few years back. The tenancy has ben sold during the year March 2011. Sale of tenancy was done by wife but payment for sale was made to assesse. Now the assessee has in turn invested money u/s.54F as well as 54EC & intends to offer the gains on sale of tenency for tax in his return. Whether he is justified in claiming that the compensation received for transfer of tenency is taxable in his hands.

CA Rajendra Purohit

CA Rajendra Purohit (Expert)
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30 June 2011 (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly -

To any person or association of persons from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse.

Hence, tenancy rights were transferred by the assessee to his wife without adequate consideration and any income generated from the investment of such amount will be assessed and clubbed under the assessee.

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