joint ownership of property

[d.v. gupta]

One of my client was joint owner of a property in a.y 2008-09.My client received whole rent of property and tds deducted on the rent in his name. he paid rs. 86000 to the other joint owner towards his share in property. The case was selected for scrutiny and assessing officer not given the credit for payment given to joint owner. he has considered all the rent received by my client. Is his view justified. should we go in appeal.

[CA Rachit Agarwal]

There is no deduction clause available for the rent paid to the co-joint owner.

In the Computation of Income itself, we can show the rental income equals to rent received less rent paid to joint owner, inspite of showing the payment to joint venture as deductions. As per Section 26 of the Income Tax Act, income included in the co-owner shares is his proportionate share and not the whole rent.

[ALOKE GHOSH]

It has not been stated by you in what manner your client has filed his return of income and whether he has included only his part of rental income. If your client can establish it as a joint undivided property, you client is entitled to claim the proportionate TDS against the same and if the same is not allowed bu A.O, it is better to go for appeal. For rest of the queries, I am of same view as of Mr.Agarwal.

AI Summary

Joint ownership rental income must be allocated by proportionate share; claim corresponding TDS credit or appeal. A joint owner should be assessed only on his proportionate share of rental income; gross rent must be allocated among co-owners, with TDS credit claimed only for the taxpayer's share. There is no separate deduction for amounts paid to a co-owner; correct tax treatment is to show rental income net by allocating the gross receipts and claiming proportionate TDS. If the assessing officer includes the entire rent in one co-owner's income and denies corresponding TDS credit, the taxpayer should establish joint undivided ownership and may appeal the disallowance.