Transfer of Property Without Adequate Consideration To father Does Not Come Under Clubbing Provison.
May 16, 2007 by taxworry · Leave a Comment
- 1. if such rent receivables will be taxed and
- 2. How whether such rent will be clubbed with my total salary income and taxed as per the new taxation guidelines or will be taxed separately ?
The rent receivable will certainly be taxable income computed in accordance with section 23 read with section 24 of the I T Act.The only debatable issue in your question is whether whole of the rent received is to be assessed as your income. The fact which have not been stated by you are:
- whether any money was spent by your father in the flat purchased?
- Whether the flat ownership is divided 50% -50% or some other ratio.
I presume , for the sake of answer , that all money was invested by you only and the flat was registered with your father as co-owners having 50-50 shares each.
The A.O , in case your file is scrutinised, shall certainly make a case that the ownership is divided to minimise the tax burden and he will assess the income in your hand. There are some case laws in this regard. As far as Clubbing provision under I T Act is concerned , there is no express provision regarding transfer of property by a daughter to her father without adequate consideration. Therefore, by law, the A.O can simply assess the income in your hand , but he may make case out of it. In my view, the portion which has been transferred to your father by you without adequate consideration , should be treated as gift. You can also get a gift deed , accordingly, certified from a notary.
Then only, half of the rent shall be taxed in your hand half in your father’s hand.
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