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CMA Intermediate · Direct and Indirect Taxation · Income from House Property

Meera transfers her let-out flat to her friend by a transfer that she can revoke at any time. The flat's rent for the tax year is received by the friend. Under the Income-tax Act, 2025, in whose total income is that income included?

The income is taxed in Meera's hands. Where a transfer of assets is revocable, income arising from it is chargeable as the transferor's income and included in her total income, regardless of who receives the rent.

  1. AMeera, as the transferor, because the transfer is revocableCorrect
  2. BThe friend, because the friend is the legal owner and receives the rent
  3. CShared equally by Meera and the friend
  4. DThe friend, but Meera gets a deduction for the rent

Explanation

Section 97(1) provides that all income arising by virtue of a revocable transfer of assets is chargeable as income of the transferor and included in the transferor's total income. Meera can revoke the transfer, so the rent is taxed in her hands. The friend's ownership or receipt does not change this.

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