Saving tax
Gopal Ranjan Panigrahi
(Querist) 06 March 2014
This query is : Resolved
Respected Sir,
A person has a landed property in his individual name.Construct office premises over the same and leases it to Bank through his individual name.
Now later he gets an PAN Card in name of HUF and submits it to lessee bank saying the TAX be deducted on HUF PAN CARD.
Property is in Individual name .Registered lease deed of such premises has already been leased by such individual with Bank.
Now can Bank make payment on the newly given HUF PAN Card . Individual says his individual PAN through other sources has already crossed the tax exemption limit. Can the Bank deduct thru HUF pan .
If Yes, what are the means. If no the reasons for the same.
Thanks & Regards
R K JAIN
(Expert) 06 March 2014
No, Bank can not.
R.V.RAO
(Expert) 07 March 2014
you already have huf pan.hope huf is active.
HUF is tax planning tool.it is distinct tax entity . transfer property in huf name.
ask bank to enter agreement with huf(if possible with old date or else current date), and ask bank to pay rent to huf.
huf enjoys separate tax exmption limit and can have separate books of accounts and audit and deducible exp.rental income of property will be in huf name.since huf is tax saving device,meet up your auditor ,create huf.plan and reduce tax.
Rajendra K Goyal
(Expert) 07 March 2014
In present conditions Bank would not agree. Take steps as advised by the expert R.V. Rao ji.
R.V.RAO
(Expert) 07 March 2014
Thanks.sri.goyalji.
T. Kalaiselvan, Advocate
(Expert) 08 March 2014
Yes, I too agree with expert Mr. R.V. Rao's opinion in this aspect. Until the property has not been transferred to HUF and the income is attributable to HUF, the tax exemption under HUF cannot be claimed.
Anirudh
(Expert) 08 March 2014
If the intention of the Querist is to reduce the tax in the hands of the person who originally owned the land and constructed the office premises, by converting the property as HUF property, he will not be able to achieve his objective, as the income from the property would continue to be taxed only in the hands of the individual. Please see Sec. 64(2) of the I.T. Act.
R.V.RAO
(Expert) 09 March 2014
i agree with sri anirudhji,for tax angle on sec 64(2).Thanks for the contribution.
since it is the property in individual name alone of the queries t, instead of joint names of husband and wife and determinate shares of both of them, the property lost the character of a joint family property(husband and wife) of huf,
as,Section 64(2) of the Income-tax Act, 1961 particularly reads as follows:
“Where, in ......, any property having been the separate property of the individual...."
Had,the shares in the property are determinate and the joint property has been pooled to a family (HUF), the income would be taxed in the hands of HUF....
so in the existing scenario for the queriest,the huf route of tax saving is not possible till property assumes a joint family property / huf property character.
