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CA Final · Direct Tax Laws & International Taxation · Income of Other Persons included in Assessee's Total Income

A commercial property yielding rent is held jointly in the names of Mrs. Sunita Rao and Mr. Dinesh Rao. Income from this property is included in the total income of Mr. Kiran Rao, who transferred the property to them. The Assessing Officer serves a notice of demand for the tax attributable to the included income. Under the Income-tax Act, 2025, what is the position of the joint holders?

Sunita and Dinesh are jointly and severally liable for the tax attributable to the income included in Kiran's total income. Where an asset is held jointly by more than one person, the Act makes all holders liable together. The Assessing Officer may therefore recover the whole attributable amount from either of them.

  1. AEach is liable only for half of the attributable tax, strictly in proportion to the shares
  2. BOnly the first-named holder, Sunita, is liable
  3. CThey are jointly and severally liable to pay the tax attributable to the included incomeCorrect
  4. DNeither is liable, because the tax can be recovered only from Kiran

Explanation

Under section 100, where the asset is held jointly by more than one person, they are jointly and severally liable for the tax attributable to the included income. The Assessing Officer can therefore recover the whole attributable amount from either holder. The option limiting each to half is wrong because it ignores joint and several liability.

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