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

Mr. Arvind transferred a house to his wife without adequate consideration, and the rental income from it was included in his total income for the tax year. The house stands in the wife's name. Under the Income-tax Act, 2025, who can be made liable by the Assessing Officer to pay the tax attributable to that included income?

The wife is liable, because she is the person in whose name the asset stands. Her liability covers only the part of Mr. Arvind's tax that is attributable to the income included in his total income, and it arises upon service of a notice of demand by the Assessing Officer.

  1. AOnly Mr. Arvind, because the income is in his total income and nobody else can be asked to pay
  2. BThe wife, in whose name the asset stands, for that portion of the tax levied on Mr. Arvind that is attributable to the included income, upon service of a notice of demandCorrect
  3. CThe tenant of the house, for the full tax levied on Mr. Arvind
  4. DThe wife, for the entire tax levied on Mr. Arvind on his whole total income

Explanation

Section 100 provides 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 to pay that portion of the tax attributable to the included income, once a notice of demand is served. The liability is limited to the attributable portion, so the wife is not liable for the whole tax.

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