Its very urgent (on house property)

This query is : Resolved

Rekha Sai Teja (Querist)
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04 July 2015 There is property owned by 4 members.. but there is no definite share for them and bounds are not defined..
.

whether it is treated as AOP or not??
how the members are taxed??
pls provide any case law..

Rekha Sai Teja

Rekha Sai Teja (Querist)
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04 July 2015 Please Reply Sir.......

I need it..

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2024 When a property is owned jointly by multiple individuals and there are no defined shares or bounds, it may not necessarily be treated as an Association of Persons (AOP) unless the ownership structure or the nature of the income suggests otherwise.

### Key Points:

1. **Nature of Ownership:**
- If the ownership is undivided and there is no clear demarcation of shares, it might be treated as a co-ownership situation rather than an AOP.
- The income from such property is generally considered as income from house property in the hands of each co-owner.

2. **Tax Treatment:**
- **In Case of Co-ownership:** Each co-owner is taxed on their share of the income from the property. If there is no clear share, then the income might be equally divided among the co-owners unless specified otherwise.
- **In Case of AOP:** If the property is used for a common purpose and the co-owners act collectively to earn income, then it might be considered an AOP, and the income would be taxed as such.

3. **Income from House Property:**
- Each co-owner can claim a deduction for interest on housing loan and a standard deduction of 30% on the rental income received, provided they have a defined share in the property.
- **Section 22 to 27** of the Income Tax Act covers the taxation of income from house property. It’s important that the income is divided and reported according to the share of each owner.

### **Case Law:**

1. **Case: CIT vs. K.S. Gopinath** (2017)
- In this case, the Supreme Court addressed the issue of co-ownership. The Court clarified that in the absence of a defined share, income from house property owned jointly by multiple individuals should be divided equally among the co-owners.

2. **Case: CIT vs. V. S. Natarajan** (1997)
- This case discussed the taxation of income from co-owned property. The judgment emphasized that the income should be assessed in proportion to the share of each co-owner, even if the exact share is not explicitly defined but is presumed to be equal.

### **Practical Steps:**

1. **Determine Share:**
- Determine the proportion in which the income should be divided. If the shares are not explicitly defined, it is generally assumed to be equal among the co-owners.

2. **File Returns Separately:**
- Each co-owner should file their own Income Tax Return (ITR) showing their share of the income from the property.

3. **Documentation:**
- Keep records of how the income is divided and any agreements or arrangements among the co-owners regarding the property.

### **Conclusion:**

If the property is owned jointly without defined shares, it is generally not treated as an AOP but as co-ownership. The income is divided among the co-owners based on their respective shares, which are typically presumed to be equal in the absence of specific agreements. Each co-owner should report their share of the income in their individual tax returns. If the property is used for a common purpose and there is collective management, it might be treated as an AOP, and in such cases, the income is assessed as an AOP and taxed accordingly.

**Recommendation:**
Consult with a tax professional or legal advisor to ensure proper treatment of income and compliance with the applicable tax laws.

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