06 January 2018
Under Section 64(i) (iv), the income arising to the spouse of the assessee from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration is clubbed as the income of that individual. In simple English it means that the income arising out of the house that is purchased from the cash gifted by you shall be taxed as your income. It is clarified under explanation 2 of Section 64 that "income" includes a loss. Therefore, the loss that arises from the self occupied "house property" will be taken as your "loss" and be allowed to be set off against your other incomes such as salary or income from business or profession. However this interpretation is not free from doubt and you should take expert tax advice since this is a highly technical issue. The deduction under section 80C for repayment of the capital portion of the loan will not be available.
CAclubindia
