Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Deduction under 80c

20 March 2009

Hi,

House Property has been purchased in the name of assessee's wife and the contribution made by the assessee is 70%. Loan for construction has been taken in the name of wife.

Can the assessee be taxable for the income from such house property?

Can the assessee claim the deduction for Interest and Repayment of loan, if the income is taxable in his hands?

Reply
Follow
Share

7 Replies

Abhinav Agarwal (M.Com C.A SAP Consultant) (814 Points)
Replied 20 March 2009

In any case assessee can't claim deduction U/s 80C or 24. Reason being the loan is in the name of wife and form 12C necessarily will be filled with 100% share of wife.

Regarding rent, Income Tax considers the physical usage of property, irrespective of legal title, here in the case such is rented. Here clubbing of income u/s 64 can be applied assuming the 70% amount is a gift from husband to wife and thus 70% of rent should be taxable in the hands of Assessee.

This is my opinion.

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 20 March 2009

Hi. I completely agree with MR. Agrawal, here sec 27 (deemed owner) cannot be applied, bt u cn consider sec. 64(1)(iv) for d same. Bt, in my opinion, first of all d net IHP should b calculatd, i.e deducting all eligible expenses, interest from total Rent received... Thereafter, assessee's income shd b calculatd on the net proceeds @ 70%

Sumit Jain (CA) (4760 Points)
Replied 20 March 2009

agree with abhinav

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 20 March 2009

In more simple words, u shd consider d assessee's wife to b owner of property. Then calculate her income from property in normal way. Finally, u/s 64 (1), consider 70% of sch income of assessee.

Ankur Agrawal (CS, CA Final) (239 Points)
Replied 20 March 2009

i find myself unable to understand.....pls sir...explain

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 20 March 2009

Answering your second question first- off course the assessee can claim deduction wrt to construction cost, replayment of loan etc. if income is taxable in his hand. Whenever, any income is taxable in anybody's hand, he will get the deduction of reasonable expenditure.

However, the income generated from house property will not be taxable in the hand of assessee. Chapter V is aplicable only when "income is transferred". Further, such transfer of income should be without transfer of assets or in certain cases revocable transfer to assets. Here asset is transferred irrevocably. Thus there is no question of applicability of chapter V.