Taxation - Income TaxQuestion 5576 of 146
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6. If Mr. A transfers the above property for inadequate consideration with an agreement to live apart, then the income of rent and interest will be chargeable to tax in the hands of -

Options

AMr. A - Nil and Mrs. A - ` 1,36,640 under income from HP and ` 15,000 under IFOS.
BMr. A - ` 2.15 lakh under clubbing provisions and Mrs. A - NIL
CMr. A - ` 2 lakh under income from HP and Mrs. A - ` 15,000 under IFOS.
DMr. A - ` 1,36,640 under income from HP and Mrs. A - ` 15,000 under IFOS. (2 Marks)
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Correct Answer

Option AMr. A - Nil and Mrs. A - ` 1,36,640 under income from HP and ` 15,000 under IFOS.

All Options:

  • AMr. A - Nil and Mrs. A - ` 1,36,640 under income from HP and ` 15,000 under IFOS.
  • BMr. A - ` 2.15 lakh under clubbing provisions and Mrs. A - NIL
  • CMr. A - ` 2 lakh under income from HP and Mrs. A - ` 15,000 under IFOS.
  • DMr. A - ` 1,36,640 under income from HP and Mrs. A - ` 15,000 under IFOS. (2 Marks)

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Detailed Solution & Explanation

Under Section 27(i) of the Income-tax Act, 1961, the transferor is not deemed to be the owner of the house property if the transfer is made to the spouse in connection with an agreement to live apart.
Similarly, the clubbing provisions under Section 64(1)(iv) do not apply to transfers made with an agreement to live apart.
Consequently, both the rental income and the interest income are taxable in the hands of the transferee, Mrs. A.
Taxable Income from House Property = 1,36,640\displaystyle ₹1,36,640
Interest Income (taxable under IFOS) = 15,000\displaystyle ₹15,000
Mr. A's taxable income from these sources is Nil.

Hence, **Option A** is the correct answer.

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