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

Mr. Arvind Bhatt's total income for the tax year includes income from a flat that stands in the joint names of his brother Sunil and his sister Meera. The Assessing Officer has attributed a portion of the tax levied on Arvind to this income. Under the provision on liability of a person in respect of income included in another person's income, which statement is correct?

Sunil and Meera are jointly and severally liable for the tax attributable to the included income. The Assessing Officer must serve a notice of demand. Because the asset is held jointly, the law makes each holder answerable for the whole attributable tax, not merely a half share.

  1. AOnly the person whose name appears first on the title is liable, and only if he is a member of the family
  2. BSunil and Meera are jointly and severally liable for the tax attributable to that income, on service of a notice of demand by the Assessing OfficerCorrect
  3. CNeither of them is liable, because the whole tax can be recovered only from Arvind
  4. DEach of them is liable only for half of the attributable tax and cannot be pursued for the other's share

Explanation

Section 100 says that where income of a person other than the assessee arising from an asset is included in the assessee's total income, the person in whose name the asset stands is liable for the attributable tax on service of a notice of demand. Where the asset is held jointly by more than one person, they are jointly and severally liable. The 'half each' option is wrong because joint and several liability lets the department recover the full attributable amount from either holder.

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