Owner / deemed owner Section 22/27

Owner / deemed owner Section 22/27

As per section 22, the owner of house property shall be liable to pay income. tax and if the title of the ownership of the property is under= dispute in a court of law, the decision as to who will be the owner chargeable to income-tax under section 22 will be of the Income-tax Department till the court gives its decision to the suit filed in respect of such property.

E.g. Ownership of a house property is disputed among. two brothers Mr. X and Mr. Yand rent is being received by Mr. X, in this case ivir.. X shall be considered to' be the owner of the house property till decision is given by the Court and after that amount of tax shall be adjusted as per court decision.

As per section 27; the following person, are to be the Owners.

(i)     Transfer of a house property to Spouse – In case of transfer of house property by an individual to his -or: her spouse - otherwise than for-adequate the transferor is deemed to. be. the owner Of 'the transferred property. In case of 'transfer to spouse in connection with an agreement to live apart, the transferor will not be deemed to be the owner. The transferee will be the owner of the house property. In case of transfer of house property' by 'an individual to his or her minor child the transferor is deemed to be the owner of-the house property transferred. In case of transfer to a minor married daughter, the transferor is not deemed to be the owner. E.g. Mr. X has two house property each having income of IO lakh and Mr. X -has gifted one house property to. Mrs. X, in this case income from such house property shall be taxable in the hands of Mr. X but if Mr. X has sold the house property to Mrs. X and has taken full payment, in that case income from house property shall be taxable in the hands 'of Mrs. X.:

      (ii)     Person in possession of a property — If any person has given possession of house property and has taken full payment but ownership in            documents has not yet been transferred, in such cases the proposed 'buyer is the deemed owner and shall be liable to pay income tax and it is called part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act.

E.g. Mi. X has sold his house property to Mr.Y for Rs.50 lakhs and has taken full payment and possession has been-given to Mr. Y but conveyance deed is not prepared in the name of Mr. Y, in this case Mr. Y is the deemed owner.

(i)           Member of a co-operative society etc. — A member of a co-operative society, company or other association of persons to whom a building or part thereof is allotted or leased under a House Building -Scheme of a society/company/association, shall be deemed to be owner of that building or part thereof allotted to him although the co-operative society/company/ association is the legal owner of that building.

(ii)       Holder of an impartible estate — The impartible estate is a property which is not divisible. The holder of an impartible estate shall be deemed to be the individual owner of all properties comprised in the estate.

Explain briefly the applicability of section 22 for chargeability of income tax for:

(i)  House property situated in foreign country and

(ii)   House property with disputed ownership.

Answer: Applicability of section 22 for chargeability of income-tax for —

(i)    House property situated in foreign country

A resident and ordinarily assessee is taxable under section 22 in respect of a house property. situated in foreign country'. A resident but not ordinarily resident or a non resident is taxable in respect of income from such property if the income is received in India during the previous year.

(ii)     House property with disputed ownership

If the title of ownership of the house property is under dispute in a court of law, the decision about who is the owner lies with the Court but till then income tax shall be required from the person who is the beneficial owner of the house property.

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