Query on Income Tax By Bharat
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Following Query was put on Efforts Blog by Bharat.
One person holds in his name a HP which is SO & his wife buys a HP in her own name & both are living together in one HP, then the other HP is to be considered as SO or Deemed to be let out? And what is the tax effect for both the individuals?
I understand following facts from your query.
1. There is house no-1 which is owned by husband.
2. His wife purchased another house. i.e. House no-2.
3. Both husband and wife live together in house No-1.
4. Your question is whether house no-2 will be considered as self occupied or deemed let out?
Please note that husband and wife are separate assesses for the purpose of income tax. As per income tax act, when the person occupies more than one house for his own residential purpose, only one house is treated as self-occupied and other houses will be treated as deemed let out.
In your question the point to be considered is whether house no-2 can be considered as " occupied for own residential purpose" by wife when she is living with her husband in house no-1 and she is not living in house no-2?
It was held by Delhi High Court in case of CIT vs. Deepak Seth that A house for residential purpose does not require compulsory residence in that house. It only requires that house should be available for residential purpose of the assessee all time. Where the assessee has retained exclusive control over possession of a house owned by him/her, though he/she may not be actually present in the house, when he/she is away from it, he/she is still in constructive possession of the residential house and as such cannot be denied the benefit under section 23(2).
Hence, House no-2 should be considered as Self occupied. As you have mentioned that house is PURCHASED by wife, section 27 provision regarding deemed ownership will also not be applied. In the absence of information I assume that wife has purchased house from her own income,hence clubbing provisions of Section 64 will also not apply.