QUESTIONS & ANSWERS
How co-owned property is assessed?
QUESTION: We have a property settled by a Will jointly among the brothers, so that we are co-owners of the property. Are we entitled to separate assessment?
Since the property is let out, but a consolidated payment is made to one of us, who has signed the lease agreement as power of attorney, tax is being deducted in his name.
How do we get the tax credit, since we are separately paying tax on the respective share of income from the property?
ANSWER: Co-owners have identifiable interest in the property under the property laws. Sec. 26 specifically provides that each co-owner is assessable on his share of the income from the property. It follows that deductions would also separately be available under Sec. 24. Tax is also required to be deducted in respect of payment to each co-owner so that tax credit can be availed by each such co-owner, even if the certificate is a consolidated one.
Even where a single payment is made, as had been done so far, a request may be made to the deductor to issue separate TDS certificates in view of the lease agreement indicating divisible ownership. However, nothing prevents the assessing officer from giving proportionate credit on the TDS certificate issued in the name of one of the co-owners, especially where all co-owners are assessed in the same circle. Certificates mentioning the credit available to each co-owner can be issued by the assessing officer with whom the original consolidated certificate is filed. On such certificates, credit can be given by the assessing officer, who is assessing the co-owner.
However, the easier course is for the assessee to receive payment with TDS certificate for each co-owner separately in future, so as to avoid any difficulty in the matter of tax credit.
S. RAJARATNAM
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