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Income tax

(Querist) 20 January 2012 This query is : Resolved 
RESPECTED SIR
I AND MY WIFE HAVE SEPERATE RETURN IN INCOME TAX.I AM GOVT.EMPLOYEE WHEREAS MY WIFE HAS INCOME FROM SALES OR OTHER INCOME.I HAVE MAKE AN AGREEMENT TO PURCHASE A COMMERCIAL PROPERTIES FROM MY ACCOUNT IN THE NAME OF WIFE.NOW I WANT TO MAKE IT IN HER NAME FROM HER INCOME SO THAT RENTAL INCOME DOESNOT INCLUDE IN MY INCOME.HOW IT POSSIBLE?AGREEMENT WAS MADE IN 2009.
Advocate. Arunagiri (Expert) 20 January 2012
You register the property in her name. By this the rental income will into her accounts only.
dinesh kumar (Querist) 20 January 2012
SIR MY ACCOUNTS MANAGER HAS TOLD ME THAT THE INCOME FROM PROPERTY WILL BE CLUBED IN YOUR INCOME DUE TO TRANSFER OF PROPERTY WITHOUT ANY ADEQUATE CONSIDERATION.
M/s. Y-not legal services (Expert) 21 January 2012
its mean the subject property in joint name? unless the property's income cant be clubbed in to your account also..

-tom-
Advocate. Arunagiri (Expert) 21 January 2012
You are not transferring the property. Your wife is buying a property in her name, from your funds.

What so ever it may be the case, if the property is in your wife's name, the rental income will not come in your account.
Raj Kumar Makkad (Expert) 21 January 2012
Well advised by experts.
Sanjeev (Expert) 21 January 2012
The Income would not be clubbed in your Income that would be part of the Income of the person who owns the property(ur wife in this case).
Shailesh Kr. Shah (Expert) 21 January 2012
If it is an 'agreement' not a 'sale deed' then get cancel and do follow:-
1. Get money back in your account;
2. Gift that money to your wife;
3. thereafter purchase property.
Vineet (Expert) 21 January 2012
As the property is purchased in your wives name, the rental income will come to her account. It is immaterial whether you purchase and gift property to your wife or gift her money and then purchase property in her name.

HOWEVER, there is a catch here. whatever you do, such income from house property shall be clubbed with your income under a specific provision of Income Tax Act. Section 64 of Act provides for clubbing of income arising directly or indirectly from an asset which is transferred to spouse without adeqaute consideration.

In your case, the investment amout is transferred to wife without adeqaute consideration, the income arising from the same shall be clubbed in your hand.
prabhakar singh (Expert) 21 January 2012
Nothing more needed.
Deepak Nair (Expert) 21 January 2012
You are rightly advised by the experts.
Sankaranarayanan (Expert) 21 January 2012
i do agree with mr vineet ,if the property is in your wife's name then the liability on part also in that property's owner name,
Nadeem Qureshi (Expert) 21 January 2012
I do agree with the experts
C. P. CHUGH (Expert) 21 January 2012
Hi if it only an agreement and no sale deed has been executed, get it executed in your wife's name and pay the balance considereation if any from her account. If full consideration has already been paid get it back from your wife's account in your account. Once she has paid full consideration directly or indirectly and sale deed is executed in her favour, there is nothing in income-tax law to club income from such house property to be clubed with spouse. Even if she does not sufficient funds to make full consideration nothing prevents her to borrow part of it from her husband to make payment. Such loan can be refunded back with a reasonable interest at a later date.
Thanks
ARUN KUMAR VERMA (Expert) 23 January 2012
Agree with mr. chugh. To avoid clubbig provisions u/s 64 of the IT Act, consideration needs to flow from spouse which could be direct of indirect and present or future with reasonable interst.
Vineet (Expert) 27 January 2012
Mr Dinesh

IF the funds flow from you (gift, interest free loan etc etc), rest assured, the income from property is taxable in your hands only.

Interest free loan from spouse shall be considered as transfer of asset without adequate consideration. If you charge interest on loan, even otherwise such income is taxable in your hand. So why this kolaveri??


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