When should 2 persons be treated as AOP?

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    DINESHKUMAR_2014 New Member

    Dear all

    Pl help me with your knowledge in this query:

    Three persons having valid PAN buy a property with specified share. Next year they sell the property at a profit. Return of Income is to be filed with Income Tax authorities. Association of persons is a person under the Income Tax Act.

    Whether that Association has to obtain separate PAN in the name of Association or
    In filing return and in challan the Association should mention all three names and respective PAN.

    Which of the above option is legally required?

  2. Parul_Gupta

    Parul_Gupta Active Member

    No need to have a separate PAN in this case.

    At the time of sale and at the time of filing of return, the co-owners would only be required to state their share and their respective PAN Card No.

    DINESHKUMAR_2014 New Member

    Dear Madam

    I have difference of opinion or am not sure. Since Association of Persons is a separate legal entity as per Income Tax Act. How it will comply if it does not have a unique PAN? Pl recheck and convince me. Alternatively you can show me some section or case law. Thanks.
  4. Parul_Gupta

    Parul_Gupta Active Member

    Not necessary.

    I don't think this is a case of Association of Persons. Many people jointly purchase Real Estate and then sell it.

    If they had constructed this plot and done more work - in that case it may have been a case of Association of Persons.

    But as per the facts shared by you, they have merely purchased Real Estate and then sold it.

    Therefore applying for PAN Card of AOP is not necessary in this case. They can apply for PAN in case they intent to but not mandatory.

    From the point of view of the assessee as well, it is beneficial not to apply for PAN of AOP and show this on their own personal name.
  5. rudrabose

    rudrabose Active Member

    With prices of Real Estate in India sky-rocketing, it is very difficult for a single person to invest in Real Estate and it is usually 2/3 people who togethor invest in a single property.

    In such cases, it is not necessary to form AOP and they can show it on their own individual name.

    It would be great if more people could share their opinion on this.

    DINESHKUMAR_2014 New Member

    Dear all

    Thanks for giving your views. Replies containing words ' difficult for single person...' and 'many people jointly ...' show (to my mind) the practice adopted by people. That practice as long as buying real estate may be right. But the treatment under income tax is entirely different. We may not know what and how those people are filing return of income. Unless a few of my friends have actually come across any such case. Law is very clear. Income tax Act has defined 'person' and each person as per IT Act must have different PAN. I am going to meet Assistant Commissioner of Income Tax in a day. I will revert with his views on this. Thanks to all who have replied. This is really healthy discussion.
  7. Parul_Gupta

    Parul_Gupta Active Member

    Dear Sir

    It would be great if you could clarify this with the Assistant Commissioner and clear all doubts.

    Thanks in advance ...
    DINESHKUMAR_2014 likes this.

    DINESHKUMAR_2014 New Member

    Today evening I checked up with Assistant Commissioner of Income Tax and he confirmed that AOP has to get separate PAN and then submit the return. He specifically informed the clause mentioned in Form 49 required to obtain PAN. Reproduced here-
    Individual: Actual Date of Birth; Company: Date of Incorporation; Association of Persons: Date of formation/creation;
    rudrabose and Parul_Gupta like this.
  9. Parul_Gupta

    Parul_Gupta Active Member

    Thank you sir for sharing this useful info.
  10. rudrabose

    rudrabose Active Member

    This info is certainly a great help and clears all the doubts.

    Thanks @DINESHKUMAR_2014
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