income property tax slab, must give information about wife’s holding in the property, otherwise you will have to pay this much tax on income, understand this math of tax
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Property Income: If you have bought a property and it also includes the name of your wife, then it is necessary to disclose the holding of both. If this is not done, the share of both husband and wife in the property will be considered as 50 per cent and both will have to pay tax accordingly.
highlights
- It is necessary to disclose the holding of both husband and wife in the property.
- In case of not giving information, equal share of both husband and wife will be considered.
- ITAT has given its verdict in one case
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what is the matter
In 2011, a business group and subsequent searches on taxpayers led the Income Tax Department to purchase a house property in joint ownership with her husband for Rs 3.5 crore. After this the question started to arise as to why the income from such house property has not been disclosed in his IT-return. Shivani Madan had invested only Rs 20 lakhs in the property, which is approximately 5.4% of the purchase price of the property. In response to the IT notice, he disclosed his share ratio in the income from the house property. This approach was rejected at various stages of appeal. The litigation then reached The Delhi Branch of the Income Tax Appellate Tribunal (ITAT). In the ITAT, the husband submitted that it has been a practice to include the wife’s name in the sale deed. In this way, it is not right to impose 50% house tax on the wife’s share. Various judicial decisions were also cited to strengthen this argument.
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ITAT rejected the submission
However, based on the facts of the case, the ITAT rejected these submissions. For example, the Tax Tribunal Bench noted that the Calcutta High Court had held that income from property should be taxed only in the name of the husband, as the wife was a housewife. The wife had no source of income and the entire investment was made by her. Whereas in Madan’s case, she was a salaried person. Actually Madan was working with the business group which was searched. Tax experts point out that adding wife’s name to the house property is quite common. However, the builder and seller of the property must document the exact holdings done by all the co-owners, details of bank accounts from which payments have been made, previous tax returns, etc. All these will come in handy in case of such litigation.
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