I received money from my PF Account after retirement and paid money for purchase of a flat in my son’s name. Later on the flat sold after 3 years with a profit of Rs 5,000 but commission paid to dealer was Rs 20,000. The earlier amount paid for purchase by me to seller was online from my bank account but in latter case, the amount was transferred to my son’s account who then paid the purchaser (in 2nd case of sale of house). Later on, after sale of flat, this sale amount was transferred by my son to my account.
Should I show the profit of Rs 5,000 in my income tax return?
Further, it is also informed that this house was purchased and later sold on Power of Attorney as registry for this property/colony is not open by the govt. Please guide me in the matter whether my son should show this transaction in his return or I should do it as money was initially paid by me and later on taken back by me only?
Please help in the matter and oblige.
Ans: Once property is gifted to relative and all the legal formalities are completed, relative becomes actual owner i.e. in your case your son. Hence, the profit arising on the transaction is to be shown in your son’s return.
The money received on transfer of flat and sent to you is gift received from son and gift received from relatives is not an income.