INCOME TAX

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  1. ZED

    ZED Well-Known Member

    I see, that is why you were under impression that it was allowed by AO.
    Had the ownership also been joint, then ALL of the members (both sons and you) would be entitled to the deduction, but not in the current scenario.

    I re-iterate that you can avail the deduction (if you have sufficient income) but not the sons.
    I will try to see if there's any way by which any benefit can be provided to them under any other provision of the Act.
    In earlier post, you mentioned that both of your sons live in a rented house (since they wanted to claim HRA). I wish to know who lives with you ?
    Do note that if they become joint owner then they will be entitled to deduction [for full amount upto permissible limit and there shall be no proportionate allowance (full allowance to all) ]
     
  2. Sir,
    The loan was granted in the name of three ie.1. R.Sridhar,2. R.Harish3.M.Ramasubramanian against the original documents of the Flat.The Loan amount was 6Lacs. EMI is recovered through ECS direct debit to my Son R.Sridhar a/c. The certificate is issued in the names of three R.Sridhar,R.Harish & M.Ramasubramaniam.The entire construction was completed within 6 months. From Fy/01.04.2006 to 31.03.2007 with the certifiate ,since my sons are not married with us only in the same flat and dedution was duly allowed. No.HRA exemption
    is claimed by R.Sridhar and R.Harish. The loan is for ten years. Though my elder son got married we are living together. My Son R. Sridhar though separately because of small baby not easy toclimbstair cases, he went downstairs single room flat and paying rent but he is not claiming anything towards HRA EXEMPTIONS since he is not eligible. Sridhar is still paying housing loan and as well paying rent.In, Sridhar case,since he is only paying EMI housing loan instalment every month from his salary every month since commencement deduction is allowed by his Employer and tax calculated and paid and on every financial year with Form 16, he is filing IT RETURNS ON DUEDATE AND ASSESSED. Like wise, my Second son is also filing along with form 16 provided by his Employer filingIT returns on duedate.2. when he is residing with me no HRA deduction claim though he is getting as per rules but when staying in outside Chennai HRA EXEMPTION is duly deducted for the rent paid by him claimed duly as per I.T. rules with relavant documents.
    After through explanation, we started claiming from FY.2013-2014 Ay.2014-2015 producing rent receipt for 96000/- and claim is allowed only54840/- as per rules. Actually he is paying rent @20000/= per month but for want of PAN NO. & co-operation of the Land Lord who is in USA , not in india. Afterdueconsultation interest on housing loan is very small ie28000/- is only claimed and tax is paid.Refund orderafter explanantions by auditor is duly credited. As far my second Son is claiming HRA exemption for theplace he is living and gettilng adjusted in his Form 16 itself. He is eligible toclaim as per rules if Land Lord declaresoriginal amount he is receiving.240000-10% of basis 41160=198840. But in his Form 16from 96000-41160 Rs.54840=. His tax is at source by the company, and he is paying tax [email protected]% and 20% and as per I.T. since his salary is hiked with HRA
    ALLOWANCE as well other allowances being Senior Employee with his efficient services not only in India, as well in U.K. and Dubai for nearly year as per his Employers instructions during important project work.From financial year 2013-2014 Ay-2014-2015 HRA exemption and interest on housing loan is claimed and assessed too. HRA claimed 54840 and interest on
    housing loan is 28000. In Fy.2014-15Ay2015-2016 interest and HRA deduction duly allowed and on the basis of Form 16 IT returns are submitted. But,HRA exemption for the actual rent
    ie 20000/= per month, he is unable to claim ie 240000-41160=208840 since he is not able
    to produce LandLord`s either declaration or PAN number. Acutally, he is paying rent incurring expenditure and tax liability too on 208840-(96000-41160)54840=on [email protected]% or 20% as per IT slabs. As to my second son, every thing adjusted in his form 16 and he is also filing IT
    returs on duedate. As to myself, though I am retired, I don`t have even taxable income, I have been filing I.T. returns Nil returns too till such time,IT authorities advised me and return my return as not required upto Fy.2010-2011Ay.2011-2012.

    It has been done quite consciously with a motto to pay tax correctly as every honest salaried people are paying. I hope and trust , I have explained as to my knowledge in lengthy not
    precisely. Regards,M.Ramasubramanian.
     
    Last edited: Oct 21, 2015
  3. ZED

    ZED Well-Known Member

    I have several proposals regarding this and if you will follow them then financially it will benefit all of the family (you and your sons). Whatever I am opining is correct to the best of my knowledge and information provided by you. You can take your considerate decision.


    1. It is impossible for the owner of the house, who has lent his property to your son, to not to have PAN. If you know his full date of birth and the name then you can check his PAN from this income site website. He is an NRI , he is deliberately not giving PAN.


    2. If you do not want to take steps mentioned in 1 above then I would advice that the rent agreement should be with YOU (and not with your son Mr. Sridhar).
    This way you will be the one, getting the ground floor on the rent , make the payment to him through your bank account. Like this, even if you do not have his PAN, you do not need to worry.
    In Next step you should , sub-rent the property so rented to your son Mr. Sridhar. At reasonable price approx 20,000 per month [not at much variance from the original, little is allowed]

    You can give your PAN to your son, and hence he will be able to claim deduction for HRA deduction at proper value.

    Further, the difference , if any from sub -renting and renting will be treated as your income from other source . If your total income before giving effect to deductions under chapter VIA [80 C etc] does not exceeds maximum amount not liable to tax, then you are not required to file the return. You can very well file it, if you so desire.
    [You have informed me in the earlier post that your income is below taxable limit,even if by virtue of above transactions your income increases, interest deduction u/s 24(b) would be admissible to you.]


    3. Your Son , Mr. Harish stays with you and sometimes he stays out of station , when he stays outside , he claims HRA. You are the sole owner of the property. In order to reduce his tax burden you should charge rent from him. If you will give your PAN, there should be no issues.
    Consider your taxable income while arriving at the price.

    [It is legal , you should charge less than 20k per month from him, since the rent of the identical unit is 20,000 that too for lower floors. NO CLUBBING PROVISIONS SHALL BE APPLICABLE. Receive the payment via bank and enter into a rent agreement. (Personally also I do not see anything wrong in it as parents say that this help their children to manage the funds properly in their life. Parents money or children money is same only) ]


    4. Since you are the sole owner of the property, the deduction which has been provided to Mr. Sridhar is practically erroneous and it should not have been allowed by his employer either. He should not claim this , but he can claim deduction of HRA. Interest deduction can be claimed by you.
    Any refund claimed erroneously is to be refunded with simple interest of 0.5% per month (or part of the month, being treated as full month)


    This is the most suitable proposal I have came up with, which is within the 4 corners of law without any tax avoidance or evasion.
    You can take decision which you feel is correct, my role was to just share with you some information.

    Further, you said your return was returned and you were told that you were not required to file the return. Assessee may voluntarily file his return of income and any income tax authority can not return/reject it. Sometimes assessees income is below taxable but they file return so that they can show the acknowledgement to the bank for loan purpose.
    [Sharing only for information purpose]

    I hope that I have resolved the issues (including the one asked in the previous post)


    God Bless you!!
     
    Last edited: Oct 21, 2015
  4. Respected Sir,
    I wish to inform that the same suggestion, you make now,, is also suggested by my well wishers and auditor collegues and incometax assessment officers collegues too. My conscience does not permit to issure rent receipt in my son`s name though many of my collegueslet out their flats and authorised me to collect the rent on their behalf by indeminitybond as a help only I am doing. In my flat all the allottees are prepared to issue rentreceipt in my Son`s name too for their flats to claim HRA. But my son is not adhearingto my advice and he is prepared to meet any contingencies if at all come from ITAuthoirites for telling facts for his claim. So, I will also stand by that. Anyway, Ithank you very much to advise properly to stand legally on my own leg with regardto IT LIABILITY.Many thanks for your valuable suggestion Sir. and helpinggenerousity for deserved unknown I.T act assessee like me. There is one rule I beliveby I.T.authorities to reject our return that people who is not earning taxable limit of 5 Lacs, need not file any return from particular year to avoid paper work of every body. This rule isprevalent at that time only and moreover I don`t want to disturb I.T. people with out any benefit either to me or to them and to avoid unnecssary paper work of the I.T.Dept. as well salaries classof IT nil return assesses. I hope that I am in order for accepting the I.T. return in that view.
    Sincerely Yours, Regards,
    M.Ramasubramanian.
     
    Last edited: Nov 20, 2015
    ZED likes this.
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