02 January 2013
Situation - Father sells self acquired proerty (aquisition to selling period - 15 years) and gives a share to his son. Son utilises this money to partly finance cost of his second residential property. Now, (a) Can this money qualify as a deduction while computing capital gain for the purpose of ascertaining income tax at the hands of the father?
(b) If the answer is NO to the above question, then in addition to Father paying 20% tax on LTCG, whether son will also have any tax liability?
02 January 2013
(a)Yes if father's name is also included in the property purchased by SON. (b) If father pays the requisite income tax, the rest of the money can be utilised in the manner he likes. So no questions asked for SON.
02 January 2013
(a) In my view the amount will qualify as a deduction in the hands of the father, only if the father becomes a joint holder in the flat acquired by son.
(b) Son will not have any tax liability on amount received since it is received from father and is not a gift as received by a relative.
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