Joint owners of a property will be liable to pay equal amount of tax on the income made from house property if the registered sale deed does not clearly qualify their share in the said property, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled in an order dated January 5, 2023.
While giving its order in the Shivani Madan Vs ACIT case, the ITAT said that in cases where a husband and his wife jointly purchase a property and the sale deed does not spell out their share, they will be considered equal owners and pay 50% each on the total tax liable imposed under the head Income from House Property.
What is income from house property?
According to the income tax law, rental income of a property — this could be a building and the land adjoining it — is taxed under Section 24 in the hands of the owner under the head income from house property. Rent generated by letting out vacant land is not taxed under this category, but income from other sources. Income from house property is charged only on land which forms part of a building — a parking lot, for instance. While the law clarifies that rent generated from shops is also taxed under the same head, it would not be taxed under this head in case the property is being used for business or to carry out profession services by the owner.
When the flat is in the name of the wife, can that be treated as flat of the husband for the purpose of income-tax?
Giving its order in the Commissioner of Income-Tax vs Ajit Kumar Roy on 28 June 2001, the Calcutta High Court had ruled that when the entire investment is made by the husband and the flat is merely registered in the name of the wife, the income from that property should be taxed in the hands of the husband and not in the hands of his wife.
While giving its order the HC relied on the Supreme Court order in the Commissioner of Income-Tax vs Podar Cement Etc. on 27 May 1997.
In its order the apex court had said: “We are conscious of the settled position that under the common law owner means a person who has not valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc. But in the context of Section 22 of the Income Tax Act having regard to the ground realities and further having regard to the object of the Income Tax Act, we are of the view, that owner is a person who is entitled to receive income from the property in his own right.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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