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

Income from a fixed deposit stands in the joint names of Ms. Rina and Ms. Sudha. The Assessing Officer includes this income in the total income of Mr. Anil, the assessee, under the provisions on income of other persons included in an assessee's total income. The Assessing Officer then serves a notice of demand on Rina and Sudha. Under section 100 of the Income-tax Act, 2025, what is their liability?

Rina and Sudha are jointly and severally liable for the portion of Mr. Anil's tax attributable to the included income. Section 100 makes the persons in whose names the asset stands liable on service of a demand notice, and joint holders are jointly and severally liable.

  1. AOnly Rina, as the first-named holder, is liable, and Sudha is not
  2. BNeither is liable, because the tax is recoverable only from Mr. Anil
  3. CEach is liable only for half of the tax attributable to the income included
  4. DBoth are jointly and severally liable for the portion of tax levied on Mr. Anil that is attributable to the income includedCorrect

Explanation

Section 100 makes the person in whose name the asset stands liable, on service of a notice of demand, for the portion of tax levied on the assessee that is attributable to the included income. Where the asset is held jointly by more than one person, they are jointly and severally liable. Limiting liability to equal halves is wrong because liability is joint and several.

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