Ancestral properties were assessed to income tax as HUF of the succeeding brothers with the eldest brother as Karta of the HUF and local authority Khata (Muncipal document) of the properties was held in the name of the Karta of HUF and one Property Khata (Muncipal document) was held in the name of the brother (Coparcener) of the Karta.
After the registered partition of the HUF properties between the brothers (Coparceners), the respective successors to the properties as allotted in the partition deed, the Khata of the properties were transferred to their respective names.
Whether the house property income (Rents) arising from the properties so acquired/allotted tothe brothers (coparceners) out of this partition be treated as Income of the new smaller HUFs of the brothers (Coparceners) and assessed to income tax or should the same be treated as Rental income of the Individual in whose name the property was allotted in the registered partition deed.
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Ancestral HUF property after partition belongs to Individuals(Coparceners) or to new smaller HUFa/c
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Tax Treatment of House Property Income After a registered partition of HUF properties among brothers (coparceners), the house property income (rents) arising from the properties allotted to each brother should be treated as follows:
Post-Partition Tax Treatment -
*Individual Income*: The rental income from the properties allotted to each brother in the partition deed should be treated as their individual income, not as income of a new HUF. - .
*Assessment*: Each brother should report the rental income from their allotted properties in their individual income tax returns. Key Points -
*Partition Deed*: The registered partition deed determines the ownership and tax liability for each property. -
*Property Transfer*: The transfer of Khata (municipal documents) to the respective brothers' names after the partition deed supports the individual ownership and tax treatment.
Tax Implications - *Income Tax Act*: Under the Income Tax Act, 1961, rental income from self-occupied or let-out properties is taxable under the head "Income from House Property." -
*Individual Tax Liability*: Each brother will be liable for tax on the rental income from their allotted properties, based on their individual tax slab rates.
By treating the rental income as individual income, each brother can claim deductions and exemptions available under the Income Tax Act, 1961, for their respective properties.
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