I have a property of worth Rs. 1 cr. which was inherited by my expired father three years back. In the year dec 2013 I gifted 55% of the said property of worth Rs. 60 lakhs to my son by a settlement deed. I am earning a month rental income of Rs. 20000.00 from other house. In this context, the IT department sent a notice to me and my son by referrring the settlemt. Is there any tax liability for me. Please clarify in detail
3 Replies
KPPM and Associates
(Chartered Accountant)
(62 Points)
Replied 02 March 2016
Hello Sidhick,
As per Section 47(iii), "any transfer of a capital asset under a gift or will" is not to be regarded as transfer, and hence does not attract Capital Gain provisions. Therefore, there is not tax liability on your behalf.
Further, as laid out in section 56(2), the same capital asset (an immovable property) is provided as exempted from tax in the hands of the receiver if the same was received as gift from a relative. Therefore, no taxation for the son as well.
The rental income, however, shall be chargable under Income from House Property.
Also, it is recommended for you to execute a gift deed.
Hope this was of help.
Ansari Salman
KPPM & Associates
sidhick
(kkkkkkkkk)
(42 Points)
Replied 02 March 2016
I thank you very much to M/s KPPM & associates for the reply. I have one more query that whether I have to reply for this notice. If so, is it necessary to attach the copy of settlement/gift deed in the reply. Sir, Please suggest
KPPM and Associates
(Chartered Accountant)
(62 Points)
Replied 03 March 2016
Yes, it is recommended to reply to the notice, since in case of non-response, the Assessing Officer may adopt whatever course of action he considers appropriate (such course is usually mentioned in the notice).
And yes,
- With the response, attach the documents related to such transfer
- In the response, disclose the nature of the transaction to help clarify its exemption
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