The Income Tax Act, 1961 lays down provisions for taxation of income from property. However, in case the ownership of the property is under dispute, determining the tax liability can become a complex issue.
As per the Income Tax Act, the person who is the owner of the property is liable to pay tax on the income earned from it. In cases where the ownership of the property is disputed, it becomes difficult to ascertain who is the rightful owner of the property and hence liable to pay tax on the income earned from it.
In such cases, the income tax department usually looks at the documentary evidence to determine the ownership of the property. If there is a registered sale deed in the name of a particular person, then that person is assumed to be the owner of the property for tax purposes.
However, if the ownership of the property is under dispute and there is no clear documentary evidence to determine the rightful owner, then the income tax department may ask all the claimants to provide evidence to prove their ownership of the property.
In such cases, the claimants will have to provide documentary evidence like sale deed, gift deed, will, etc., to prove their ownership of the property. The income tax department will then examine the evidence presented by each claimant and determine who is the rightful owner of the property.
Once the rightful owner of the property is determined, he/she will be liable to pay tax on the income earned from the property. In case the income has already been received by someone else, then that person will have to pay the tax on behalf of the rightful owner.
It is important to note that if the ownership of the property is under dispute, then it is advisable to not claim the income earned from the property until the dispute is settled. In case the income has already been received and spent, it may become difficult to recover the tax amount from the rightful owner.
In case the ownership of a property is under dispute, determining the tax liability can become a complex issue. The income tax department usually looks at the documentary evidence to determine the ownership of the property. Once the rightful owner is determined, he/she will be liable to pay tax on the income earned from the property. It is advisable to not claim the income earned from the property until the dispute is settled.
