Buying property when wife is estranged

The object of law is to tax the income of the mother – sister in the hands of the son – brother (i.e. you) if the income of the mother – sister arises to them from assets transferred to them by their son – brother (i.e. you as the case may then be). In the present brief before me, you are asking that if you buy property in the name of mother – sister then will they be hit by bar of Income Tax or what is tax implications.

The term "indirectly" is intended to cover such tricks. If such purchase are inter-connected and are parts of the same transaction in such a way that it can be said that a circuitous method has been adopted as a device to evade the implications of S. 16 (3) (a) (iii) Income Tax Act, then the case will fall within this section. In the present case, the device is palpable and the benami sale purchase are so intimately connected that they cannot but be regarded as a part of a single transaction for a reason you cannot successfully explain why you made a big gift to your mother – sister as the case found out seeing Registration of sale deed to your mother - sister.

The purchase of the house at first was intended to be in the name of you but since you have estranged relationship with your wife you are thinking otherwise. When IT commissioner questions you as lead money trail to purchase such property will originate initially from you to either of the two named ladies in your family. It will be rather difficult to see why the ladies would have to be named as the vendees if they did not have sufficient funds of their own. They could only buy- the property if some one gave them the money. It is reasonable to infer from the facts that before the son – brother (as the case then may be i.e. you) pays the amounts to purchase property, you are looking up to the Hindu Marriage Laws Amendment Bill 2013 and found two things bare reading the Amendment that upon divorce self acquired property of yours will be halved and that the income of the property would still be regarded as your own income if you buy any assets for either of the two named ladies. So you hit upon the expedient that you could buy the assets and register the assets for either your mother – sister names as the then case may be, obviously failing to appreciate that the word "indirectly" in Income Tax Act is meant to cover such tricks.