Originally posted by : kaushal (taxbykk)
	Hi all very happy to note such a positive discussions. I think let krish clear some confusions then i will explain my view point again. I have noted the reply of prabhavaty. I shall include that reply also in my answer. Thanks

There is some prob. in understanding of facts of questionn sir,  

Frist thanks to all for the replies and the details you have shared. It has been great to follow this forum. 

My query was probably amiguous because I added "HUF" unknowingly into the question without asking the questions explicitly.  Let me clarify as much as possible. 

1. The property was bought by my wife's father (my father-in-law) using his own funds long ago.

2. He did not leave a will and hence after his death, the property came to his (my father-in-law's) legal heirs (my mother-in-law, my wife, my wife's 3 siblings); 5 people in all. 

3. All of them jointly sold the house (all of the them signed the sale deed) and divided the sale value into already agreed proportinate amounts. 

4. My wife's proportionate share was credited to our (me and my wife's) joint account. 

5. As mentioned ealier my wife is a homemaker. 

So, when I file for tax this year,  how do I account for the amount that was deposited in our account 

Do I

(a) show it as my income from sale of property. I always file return as Individual

(b) show it as my wife's income from sale of property. Should I file her return as an Individual and since she does not have any other income, only this will be shown as income for her. 

(c)  Can both of us file as HUF

Pls. let me know and thanks again for all the responses... 

Originally posted by : Kumar Krish
	Frist thanks to all for the replies and the details you have shared. It has been great to follow this forum.  My query was probably amiguous because I added "HUF" unknowingly into the question without asking the questions explicitly.  Let me clarify as much as possible.  1. The property was bought by my wife's father (my father-in-law) using his own funds long ago. 2. He did not leave a will and hence after his death, the property came to his (my father-in-law's) legal heirs (my mother-in-law, my wife, my wife's 3 siblings); 5 people in all.  3. All of them jointly sold the house (all of the them signed the sale deed) and divided the sale value into already agreed proportinate amounts.  4. My wife's proportionate share was credited to our (me and my wife's) joint account.  5. As mentioned ealier my wife is a homemaker.  So, when I file for tax this year,  how do I account for the amount that was deposited in our account  Do I (a) show it as my income from sale of property. I always file return as Individual - No. its not your property by inheritence4 (b) show it as my wife's income from sale of property. Should I file her return as an Individual and since she does not have any other income, only this will be shown as income for her.  - Yes, she is eligible to claim the Capital gain , and pay tax after availing threshold limit,  (c)  Can both of us file as HUF - No, its not a property of HUF, but its her own property Pls. let me know and thanks again for all the responses...

She has right over the funds got from her ancesteral property, better to make an bank account / Fixed deposit in her name, 

she will get exemption of 1.9 Lacs per year for interest + other income if any

Your query and there Ans. is as follows :-

(a) show it as my income from sale of property. I always file return as Individual

Ans. No, Because this is not your property/right hence you have not Owner of the property therefor this gain is not taxable in your hand even if amount credited in your joint Bank A/c

(b) show it as my wife's income from sale of property. Should I file her return as an Individual and since she does not have any other income, only this will be shown as income for her. 

Ans. Yes, This is your wife's Income and taxable in your wife's hand as sale of property. You file your wife's return as an individual even if no any other income and she has housewife.

Generaly person think if once IT return submit then every year required to submit the IT return, this is wrong think. As you say his wife household and no any other income then next year you not required to file the income tax return.

(c)  Can both of us file as HUF

Ans. No, Because this is not a HUF Property, its only personal right of your wife.

You says for accounting

firstly you equally split the Bank A/c Balance(Except the Amt which receive from sale of your wife property) and amt which receive from sale of property is Add in wife's Bank A/c Balance.

Suppose Bank Balance as on 31.03.2011 is 1000000(Include 950000/- which reced from sale of property)

Show In your Balance Sheet  25000/-

[ (1000000-950000 ) / 2 ]

Show In your Wife's Balance Sheet  25000+950000 = 975000/-

[ (1000000-950000 ) / 2 ] + 950000

If at any point i am wrong then suggest/update/inform me

THANKS TO ALL

Dear krish

After reply of krish I again stand by my answer. This is an income of HUF since property was transferred before partition. It is a joint property. Capital gain shall arise in the hands of HUF. After sale cash is being distributed and not the property.

1. Joint property (left it without will) --> sell = HUF's income/BOI's income

2. Joint property --> partition by mutual consent --> sell individual share --> Capital gain shall arise in then hands of individual owner.

Thanks

If the property is inhered from parents by wife it can not be treated as Husband's HUF property. Capital gain is taxable in the hands of wife and income tax will be calculated on 1/5th portion. An exemption upto 190000/- on capital gain is available to wife.