Income Tax Assessment of Income from House Property visavis Coowners

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The Tax Publishers Income Tax--House Property Assessment of Income from House Property vis-a-vis Co-owners Sameer Bhatia The learned author in his write-up has discussed the provisions of section 22 vis-a-vis section 26 of the Income Tax Act, 1961 so as to analyse a vital question of law pertaining to taxability of rental receipt arising out of a property in case of co-ownership/joint ownership. He contends that even a beneficial owner akin to a legal owner is also entitled for a concession under section 26 of the Act even though his beneficial percentage of ownership is not ascertainable in terms of the conveyance deed executed for the demised premises out of which the rental receipt arises. He argues that a person even in possession can avail the concession available without any definite, earmarked or protected share of ownership/profitability provided he is able to establish his propitious/beneficial contribution in the estate for claiming deduction under section 24. 1. Prologue Income Tax Act, 1961 recognizes for the purpose of taxation five independent and separate heads of income vide which assessees are required to declare the sources accordingly to the head specifically earmarked for such purpose. Time and again, declaration of source of income by the assessees have been the subject matter of wide controversies such as income attributable to sale of speculative(s) falling in nature shares, mutual funds etc. being put to assessment under the head capital gains by the assessee but deemed as business income by the department in the course of assessment proceedings and vice-versa, assessment of rental income projected under Part-C of Chapter IV i.e. 'Income from House Property' dealing with computation of income as income from business activity and vice-versa amongst many other disputed cases. Section 22 to 27 of the Income Tax Act, 1961 caters to the assessment of income falling under the rental head of income for which separate deductions are provided under section 24 which has been amended quite a number of times latest by the Finance Act, 2001 with effect from 01st April, 2002. 2. Criteria of Taxing rental income in case of joint/co-ownership SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--House Property

Assessment of Income from House Property vis-a-vis Co-owners

Sameer Bhatia

The learned author in his write-up has discussed the provisions of section 22 vis-a-vis section 26 of the Income Tax Act, 1961 so as to analyse a vital question of law pertaining to taxability of rental receipt arising out of a property in case of co-ownership/joint ownership. He contends that even a beneficial owner akin to a legal owner is also entitled for a concession under section 26 of the Act even though his beneficial percentage of ownership is not ascertainable in terms of the conveyance deed executed for the demised premises out of which the rental receipt arises. He argues that a person even in possession can avail the concession available without any definite, earmarked or protected share of ownership/profitability provided he is able to establish his propitious/beneficial contribution in the estate for claiming deduction under section 24.

1. Prologue

Income Tax Act, 1961 recognizes for the purpose of taxation five independent and separate heads of income vide which assessees are required to declare the sources accordingly to the head specifically earmarked for such purpose. Time and again, declaration of source of income by the assessees have been the subject matter of wide controversies such as income attributable to sale of speculative(s) falling in nature shares, mutual funds etc. being put to assessment under the head capital gains by the assessee but deemed as business income by the department in the course of assessment proceedings and vice-versa, assessment of rental income projected under Part-C of Chapter IV i.e. 'Income from House Property' dealing with computation of income as income from business activity and vice-versa amongst many other disputed cases. Section 22 to 27 of the Income Tax Act, 1961 caters to the assessment of income falling under the rental head of income for which separate deductions are provided under section 24 which has been amended quite a number of times latest by the Finance Act, 2001 with effect from 01st April, 2002.

2. Criteria of Taxing rental income in case of joint/co-ownership