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Capital gain & gift amount

S DASGUPTA (AGM) (27 Points)

17 July 2015

I have following issues for expert's valuable suggestion before filling ITR forms.:

1. My wife (housewife) purchased a flat 6 yr ago from my salary income/savings and got registered in her name only. Now, i am selling the flat in next month. However, some advance amount has been taken from customer thru cheque and deposited in wife's bank account in March 2015.

Now please let me know how to declare this amount in ITR-2 so that tax is avoided in AY-2015-16.

Since the balance amount of cost of flat will be received to my wife in Aug'15 after sell, the capital gain will be declared in AY 2016-17. Now, please let me understand who will declare the capital gain amount- my wife or myself since the flat was purchased earlier from my income.
2. Is there any provision to declare gift amount in ITR form. If yes, pl specify the ITR forms for individual & HUF.

Clarifications on above issues will be highly appreciated

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3 Replies

Z (Tax Consultation (US and India)) (2965 Points)
Replied 17 July 2015

Although the flat was purchased from your income , prima facie , she is the owner of that property .Well ofcourse if you plead that the property was purchased in her name merely for lowering the stamp duty or any other reason and if you are able to proof that you are infact the real person who purchased it (evidence of payment from your bank Account, no source of income in hands of wife) you can be treated as owner.

But if there are no issues, let her be the owner of the property and let the capital gain tax also be on her income.

This amount is not in the nature of income and does not requires disclosure. If you have proof of the receipt (so that you can substantiate it as an advance) and PAN of the giver then it should be sufficient.

GIft from relatives is exempt and can be shown under schedule EI (Exempt Income)

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S DASGUPTA (AGM) (27 Points)
Replied 18 July 2015

Thanks very much for valuable suggestion. However i would like to share few observation regarding the issue:

Actually there is no issue on purchase of flat on whose income and husband (myself) do not want to own the earnings on the flat. The only concern was can housewife legally claim / own the property & income from this even if her husband invested on this earlier. From the suggestion, it is now clear that LTCG can be claimed by wife only after sale.

Regarding the advance amount, i have all required proof including PAN of the giver & the amount has been credited to bank a/c in March'15. Accordingly, i want to reassure how this amount shall be reflected in ITR for AY 15-16 or otherwise it does not reqiuired disclosure in ITR as suggested. I have deep concern on this as the adv amount has already been in bank which should be accounted somewhere.

Your valuable suggestion / comment will be highly apreciated.

Thanks.

S Dasgupta

Z (Tax Consultation (US and India)) (2965 Points)
Replied 18 July 2015

Thats why I used the word prima facie. Unless investigation is done or you yourself want to claim the property in your name, she would be considered as the owner. Legally registry must have been in her name, so unless challenged , she is the owner . Having a property registered in ones name is not the conclusive evidence of the ownership but its merely a prima facie evidence.

When property is purchased in someone elses name but the money has been invested by any other person then such a transaction is called benami transaction , in regards to which, during the proceedings the AO has the right to identify the real owner.

At that time you can plead that property was purchased in name of wife for some reason but the money is infact yours so you should be treated as the owner.

Would like to mention that forefiture of advance money is treated as income u/s 56(2)(ix) and that requires discloluse under the head Income from other sources.

(What do you mean by accounted somewhere else?)

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