A residential house is in the joint ownership of a father and daughter. They want to give it on lease to an employee of the bank. Rent per year is less than 1,80,000. Can bank make agreement with one owner? Can rent be credited into one owner's account by taking noc from other owner in the form of an application?
Menu
Joint ownership residential property rent credit on single account
Replies (9)
If there is a NOC then it will tantamount to a diversion of income with an overriding title and therefore income should not be chargeable in the hands of both of the co-owners.
Thanks for your reply. I just want to confirm is this diversion of funds legal? From the side of the public sector bank is it right to credit the amount into one owner's account?
Yes, but it has to be carefully documented in the deed. The deed must also mention about the co-owner who would not be getting any income and specific reference that the consent of the co-owner has been taken.
Such cases are not uncommon.
From the tax purpose is it the liability of house owners to show it in the income tax?
Income will be shown, s.b.t. the provisions of the Act, by the assessee to whom the income has accrued and not by all the co-owners.
There can be misuse of this provision as well. One owner may assign income to other to avoid payment of income tax.
Legally that person will not be entitled to recover anything. Suppose you have relinquished your right to receive the income then will you be able to claim anything legally from your co-owner or the lessee?
You might think of cash settlement, but that would be illegal as well. Further, there would be no guarantee that the other co-owner will actually pay you. If he doesn't will you be able to sue him in court?
Once you have relinquished the right to receive the income, it can not be taxed unless it is found that you have directly or indirectly received or would receive such income.
I agree.. but in legal terms if a person owns some property and gives it on rent then obviously it is his income and he cannot impose it on someone else. Like a person cannot give anyone else's account no. To transfer his income.
Dear Sir, you are not understanding the concept. You are free to take your course of action but whatever I said was legit. If you are not satisfied with my explanation then you may consult some other qualified tax consultant.
Recent Threads
- Deferment period for Advance Tax under Section 234
- Permanant transfer of duty free goods by Advance A
- 1% TDS Deduction on Property purchase through inst
- Tax on leave encashment on retirement
- Guidance Required on Notices Under Section 234B Af
- Rcm invoices and normal invoice
- Regarding STCG on Equity
- GSTR 9 details with same PAN & different Turno
- Hotel ITC
- ITR for Trust- 12A
Related Threads
CAclubindia
