House purchased in the name of wife and income tax impact

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House purchased in the name of wife and income tax impact 
A Person purchased a House Property in the name of his wife (100% Share), but he became the Co-Borrower with his wife for taking Home Loan.
The wife has No Income in her hand, and the husband is paying full EMI from his own Account.
Now, the questions are-
1. In whose hand, Income/Rent received from that house property will be taxed?
2. Will this Income be clubbed in the hands of Husband?
3. Who will get the benefit/deduction of Interest u/s 24(b) of ₹2 Lakhs?
4. Whether Husband will be eligible for 50% Interest Deduction (since he is a Co-Borrower in that Home Loan)?
5. Can the wife claim Loss in her hand (with the Interest Deduction) and, subsequently husband will be clubbing that Loss in his hand?
Opinion;:
1. The entire rental income is taxable only in the hands of husband as the entire investment has been made by him.
2. Husband would only  get deduction for  the entire interest.
3. Wife cannot claim deduction for any portion of interest.
4. The entire rental income is to be offered in the hands of Husband under sec 22.
The deduction for interest is to be claimed under sec 24
5. The decision of Hon’ble SC in Poddar Cement’s case and decision of Hon’ble Calcutta HC in Ajit Kumar Roy’s case regarding beneficial holding may be of use.

4 Comments

  1. October 20, 2020
    deepaksapra

    Informative

    Reply
  2. October 20, 2020
    Vikas Jain

    How husband can claim deduction as he is not the owner of House Property as it is the essential condition u/s 22

    Reply
  3. October 21, 2020
    Vipul

    What will be treatment when this house is sold? Capital gain arising on such sale, whether to be taxed in the hands of wife or husband or both?

    Reply
  4. October 22, 2020
    CA RAHUL

    Very useful discussion it was. This is practical case every where.

    But pls clarify the provisions applicable wrt BENAMI LAW …
    CA RAHUL JAJU – 9420380912 – JAJURAHULJ@GMAIL.COM

    Reply

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