Purchase of immovable property

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md abdullah

graduate

42 Points Posted on 24 September 2020

Mr x being the husband paid the purchase consideration in cash for the property in installments but the property was registered in the name of wife to save stamp duty. No ITR was used to be filed for the wife. Now an intimation has been recieved to the wife for non filing of return involving purchase of the property. Property has not generated any income till date.

Q.Wife is required to file return?
Q. Property will appear in whose balance sheet?
Q. Tax implication regarding payment made in cash?

Replies (3)

CA Kushwanth AVSR

CA in Practice CMA by Qualification

1593 Points Posted on 25 September 2020

If your wife has sufficient income then you can file your wife return
If there is no such income and if you have income and filed the return then you can state the department same and as per clubbing provisions you can say that such income is yours but purchased asset on your wife name and such asset is not earning any income hence you had not shown any income of that asset in your return
Property can be appeared in the balance sheet of your wife as accounting is different from Taxation

Coming to the tax implication point.... The person who received the amount in cash might face consequences. Cash Receipt is not allowed as per section 269ST if the transaction value is more than 2,00,000 and in this case as your paying the amount, so there might not be any tax implications in regard to that

md abdullah

graduate

42 Points Posted on 25 September 2020

The amount of purchase consideration paid which was earlier appearing in Mr X's balance sheet , how that will be accounted and if property appears in wife's(having no income) balance sheet how to balance the balance sheet??

CA Kushwanth AVSR

CA in Practice CMA by Qualification

1593 Points Posted on 25 September 2020

I think you can debit the capital account which will impact like you had gifted the amount to your wife and she purchased the asset(recommended). Or you can show it like you gave loan to her and she bought the asset with that amount but the problem is that in this case section 269SS will apply and you can't give loan in cash so penalty might arise(it might not arise as it comes under clubbing provision).