Joint ownership tax liability between husband wife

Originally posted by : amit jha
	Dear Sir, Me and my wife purchased a DDA flat in 2007 where ownership was specified in the sale-deed Agreement (Me and my wife's ratio was 25 : 75). The flat was rented out to L&T co. and our homeloan was from GE Wizard. In the first year, both of us proportionately claimed IT rebates due to the loss from the above mentioned property (as rental income was much less than the interest paid by us). Next year, i.e. in 2008 she lost her job, and I started claiming 100% IT rebate after my wife wrote an undertaking that she will not claim any IT rebate. Now, the IT assessing officer (Addl. commissioner IT) is asking if there is any written provision to support our case. Your piece of advice in this regard will definitely serve our purpose. If possible, please, respond. Thank you, very much. With all my regards Amit Jha   P.S. Email id. jhaamit1 @ yahoo.com My next hearing is on 15-2-2011.

more details required, 

a) as the property is rented, who is the receipent of rent? is it divided proportionate or accounted fully in your hand?

b) as you claimed that your wife lost her job, so did she filed NIL tax return, or avoided it ?

c) for the broken period i.e from 1st april to the actual date , some payment must have been done from her account, is it accounted properly ?

as sec 80C does not write anywhere any legal restriction, but before concluding the same, it has to be established that the claim is not mere book entry to offload the tax burden but the real facts worked togather. 

Respected Sir,

Thanks for such a prompt response. Sir as per your instructions, further information are as follows:

a Total rent was 10890 out fo which 9900 was credited in wifes account and 990 in my account.

b.My wife Dr. Seema was employed as senior scientist in NDDR deptt. of Ranbaxy from 0ct 2001 to July 2008. And she is still jobless. She did file her return in 2008-2009 and claimed refund of 21000 (TDS was deducted in Ranbaxy from 1-4-2008 to 31-7-2008)  as her total income that year was within the exemption limit.

c.There are two Home loan  account of GE with emis 30667 and 7205 respectively. 30667 was debited from my ac. and 7205 from wife's account. And every month transferred Rs. 21740 to my account to maintain proportionately our respective share in emi payment. This was continued till 31-3-2011, even after she lost her job as she had PF money from her employer.

Sir, I have tried to provide you the details, if possible please find me a written provision to support my case.

Originally posted by : amit jha
	Respected Sir, Thanks for such a prompt response. Sir as per your instructions, further information are as follows: a Total rent was 10890 out fo which 9900 was credited in wifes account and 990 in my account. b.My wife Dr. Seema was employed as senior scientist in NDDR deptt. of Ranbaxy from 0ct 2001 to July 2008. And she is still jobless. She did file her return in 2008-2009 and claimed refund of 21000 (TDS was deducted in Ranbaxy from 1-4-2008 to 31-7-2008)  as her total income that year was within the exemption limit. c.There are two Home loan  account of GE with emis 30667 and 7205 respectively. 30667 was debited from my ac. and 7205 from wife's account. And every month transferred21740 to my account to maintain proportionately our respective share in emi payment. This was continued till 31-3-2011, even after she lost her job as she had PF money from her employer. Sir, I have tried to provide you the details, if possible please find me a written provision to support my case.

a) at 1st instance the House property income should be taken as "interest payable less rent received" in gross in single hand or proportionate way, but the rent received should be treated in same way of interest.

c) 30667 + 7205= 37872 is the total emi as per your records, but unable to understand the 21740 treatment transferred to your account.

form your post its assumed that the amount is paid by your wife only and u r willing to claim, but unfortulately there is no provision for claim of exemption by book entry or by virtue of shift by self declaration, We can argue to department in case the amount is "paid in total" by the person who is claiming the deduction, provided that all requisite accounting is done in single file from scratch i.e rent received to EMI payment and deduction claimed.  

Respected Sir,

I have got your point very clear and want to clarify my position on the basis of the querries sent by you. As I have already mentioned we have 2 loan accounts, one homeloan with an emi 30667( was paid by me from my salary account) and the second home loan topup with an emi of 7205 (was paid by my wife). Since the major portion  of the rent i.e. 9900 was credited to my wife's account and only 990 in my account. Once she lost her job and income in one stroke, she used to transfer some amount to my account (bank located inDelhi) from her Bank (Gurgaon) account for only 2 reasons i.e.. to return the rental income from the property to me and 2.. to meet some of our every day expenses. And it must be made clear that this transfer was not done consistently.  So my point is, that once she lost her job she had no income and she was in no position to pay her emis in future and even till date the status is unchanged. Practically, I paid all the emis. Last but not the least,me and my wife declared the share agreement on Rs 50 stampimmediately after unem ployment,  in June 2008.

I hope, I have made my position clear and threrefore solicit your valuable suggestion in this regard.

Thank you very much.

WIth all my regards

Amit Jha 

in such case the payment of wife done by you is "gift" to wife, and as she is not having taxable income, she can not claim the incometax benefit, 

however your incometax benefit is intact. 

again one mistake is done here, her EMI installmen amount t is lower than her share of rent ....so the rental income is enough to meet her share ........... hence there is no question of ..........negative house property income (correct me if i m wrong)

there is one short hope, if u can arrange the receipts ( or payment certificates) of the GE in your favor ( they can mention your name as payee a/c your wife) then you would be actual payee, hence the deduction would go in your hand.

Respected Sir,

My wife's share of property as specified in sale agreement is 75% and so she was suppose to pay an emi of ( 75% of the total emi i.e. 37000x75/100=28000 approximately.

Since the Lease agreement was made in the previous year i.e. 2007with the L&T and she was in job and the main owner and consequently 75%, rental income was sent to her. Accordingly, in the first year of the possession of the property, my wife(75%) and me(25%) claimed IT benefit in proportion of 75 : 25  ratio. Tha'ts why L&T continued to send rent to her( after the extension of lease agreement)  next year i.e. in 2008-09. And it was in 2008 , my wife lost her job and all the abovementioned development took place. If possible, please respond. I hope, i am not bothering you too much.

Many thanx for your prompt response.

With warm regards

Amit Jha

to claim the incometax benefit of wifes share u paid, just get the receipts or certificates from GE that you have paid the wife''s share, 

incometax benefits are available in hands of payee, not by virtue of transfer/ book entry

Respected Sir.

Words cant express. I am really thankful to you. But is there is any written rule or provision to support my case. If possible, please, quote that specific subsection or section.

With all my regards

Amit  Jha

no rule is required, as once u become the payee its with you

as like the LIC premiums can be paid by anybody for himself or family member, but the conditions are that the benefit is available in hands of actual payee only,

Respected Sir,

I really feel enlightened by your useful piece of advice. I will definitely get back to you after my next hearing.

Thank you, very much, Sir.

With warm regards

Amit Jha

welcome always 

Interest on borrowals invested in properties owned by wife/minor children is deductible - Where the assessee had borrowed money at interest to purchase certain house property in the names of his wife and minor children and the income from that property was included in the assessee’s total income under the provisions of section 64(1)(iv) and (v), it was held that the assessee’s claim for deduction of interest on borrowed money under section 24(1)(vi), read with section 27(1), could not be rejected on the ground that the borrowing had been effected, not in the name of the assessee’s wife or minor children, but in his own name - S.M.A. Siddique v. CIT [1984] 148 ITR 307 (Mad.).

Source : 

https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2001ITAct/Caselaws2001/casesec24.htm

Respected Sir,

I am, really overwhelmed by your selfless, sincere and dedicated effort.

I feel perpetually indebted to your this act of kindness.

With best of my regards

Yours sincerely

Amit Jha