| Question And Answer | |
|---|---|
| Subject: | BOI OR Co ownership |
| Category: | Income-Tax |
| Querist: | Kulkarni P.S |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Association of persons (AOP), BOI, Co ownership |
| Date: | June 20, 2022 |
Assessee and 10 others friends have purchase two plots in The year 2019.and decided to do the construction. Also got the plan approved from Local authority in the name assessee and others. All the owners of land have executed MOU cum declaration where they have mentioned that all have agreed to open Escro account and which will be operated by assessee and one more person from remaining land owners. Each owner will contribute amount require for construction in the same proportion of their ownership of land. In the said declaration they have also mentioned the ratio of profits and losses to be share in proportion of their ownership in land.
They have obtained the PAN, Tan, registration under RERA and GST as BOI under the name and style assessee and others. They have filed the return for the first year as BOI.
Whether Act of assessee by considering them as BOI is correct? Can they be considered as Co owners of the project?
Is there any other alternative in this situation.
The stand of the assessee is not incorrect. Albeit, it is advisable to form a Company, inter alia, as the rate of tax is 25 per cent if the Turnover is less than Rs. 400 Cr. Au Contraire, where the share of members is known, and the income of any member of BOI exceeds the maximum amount which is not chargeable to income-tax i.e., Basic exemption limit; In this case income of AOP/BOI shall be taxable at maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).
The stand of the assessee is not incorrect. Albeit, it is advisable to form a Company, inter alia, as the rate of tax is 25 per cent if the Turnover is less than Rs. 400 Cr. Au Contraire, where the share of members is known, and the income of any member of BOI exceeds the maximum amount which is not chargeable to income-tax i.e., Basic exemption limit; In this case income of AOP/BOI shall be taxable at maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).