Income from house property given on rent by co-owners:
This query is : Resolved
CA. VIVEK PAI
(Querist)
09 November 2012
Facts:
1. Mr A and Mrs A (husband and wife) are co-owners of a house property.
2. However their investment component is Mr A- 80% and Mrs A - 20%.
3. The property is let out and annual rent received is Rs 12,00,000/- and is shared in equal proportion ie Rs 6,00,000/- each. This has been mentioned in the Lease Agreement with tenant.
4. Assumption : Gross Annual Value of the property u/s 23(1) shall be the Rental income.
Queries:
1. Is the income of Mrs A liable to be clubbed in the hands of Mr A to the extent of Rs 30,000/-pm (Rs 360,000)ie under section 64. ie differential 30% of rent received by Mrs A.
2. Is the standard deduction under section 24(a) available separately in the equal proportion (Rent sharing) or in proportion of investment (80:20).
3- What will be the Answer to query 1 and 2 if Mr A executes a gift deed and takes the following steps:
a) cash gift and with which Mrs A purchases the balance interest in the property ie 30%
or
b) transfer property to Mrs A without consideration to Mrs X to the extent of 30% of the investment component so as to make the investment proportion equal.
1. Mr A and Mrs A (husband and wife) are co-owners of a house property.
2. However their investment component is Mr A- 80% and Mrs A - 20%.
3. The property is let out and annual rent received is Rs 12,00,000/- and is shared in equal proportion ie Rs 6,00,000/- each. This has been mentioned in the Lease Agreement with tenant.
4. Assumption : Gross Annual Value of the property u/s 23(1) shall be the Rental income.
Queries:
1. Is the income of Mrs A liable to be clubbed in the hands of Mr A to the extent of Rs 30,000/-pm (Rs 360,000)ie under section 64. ie differential 30% of rent received by Mrs A.
2. Is the standard deduction under section 24(a) available separately in the equal proportion (Rent sharing) or in proportion of investment (80:20).
3- What will be the Answer to query 1 and 2 if Mr A executes a gift deed and takes the following steps:
a) cash gift and with which Mrs A purchases the balance interest in the property ie 30%
or
b) transfer property to Mrs A without consideration to Mrs X to the extent of 30% of the investment component so as to make the investment proportion equal.
Soumitra Basu
(Expert)
10 November 2012
THE INCOME AND THE DEDUCTIONS SHALL BE ASSESSED IN 80/20 RATIO IRRESPECTIVE OF LEASE DEED.
CLUBBING PROVISION MAY BE APPLICABLE
CLUBBING PROVISION MAY BE APPLICABLE
CA SAYANTAN BASU
(Expert)
15 November 2012
Dear sir ,
in the case of co-ownership it has to be calculated on the basis of the definite share .... and in the case of co-ownership section 64 will not be applicable because of section 27 which is related to the house property . here no house property is being given without consideration ............
in the case of co-ownership it has to be calculated on the basis of the definite share .... and in the case of co-ownership section 64 will not be applicable because of section 27 which is related to the house property . here no house property is being given without consideration ............
CA. VIVEK PAI
(Querist)
15 November 2012
Therefore, it can be summarised that in this particular case, Mrs A's rental income over and above her investment share shall be clubbed with Mr A's income under section 64 and the income attributable to her investment share in her own hands. Right?
I think the same conclusion holds good for my query no 3 above. Can you please clarify?
Therefore, it can be summarised that in this particular case, Mrs A's rental income over and above her investment share shall be clubbed with Mr A's income under section 64 and the income attributable to her investment share in her own hands. Right?
I think the same conclusion holds good for my query no 3 above. Can you please clarify?
Dhirajlal Rambhia
(Expert)
10 August 2023
Yes, your assumption is correct.
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