My father had settled a valuable self-acquired property by way of a Will jointly in the name of myself and my bother, while leaving other properties to other family members. Since myself and my brother jointly own this property, we are filing returns in joint name as Association of Persons (AoP) for the income from this property.

It incidentally saves our tax by having a lower rate of tax on such income from this property by not clubbing the share income from it with our other income for which we are filing separate returns. Is it in order?

Where a property is left by a Will, the income of the estate of the deceased is taxable in the hands of executor in his capacity as the executor. Individual beneficiaries of the Will become taxable as and when the assets are distributed by the executor to them.

In the case of intestate succession, the property gets vested on the legal heirs immediately on death so that each legal heir becomes responsible for inclusion of his share of income in his assessment.

In the reader's case, it appears that execution proceedings are over, because it is stated that the patta and corporation tax have been transferred in the joint names and that the income is being divided by them. There is no Association of Persons (AoP) on mere joint ownership of property. Apart from the same, Sec. 26 of the Income-tax Act specifically provides that in the case of co-owned property, each co-owner is assessable in respect of his share of income. Respective share income is required to be included in personal returns.

The reader is advised to file revised return in his personal case including the share income wrongly omitted for earlier years for which the income was required to be included.

Belated returns for such years that had become time barred could be filed with a request for regularising the same under Sec. 147. Payment of tax along with interest would save the cascading interest liability. Voluntary returns would avoid penalty, which can be waived under Sec. 273A by Chief Commissioner, where the assessee makes a full and true disclosure in good faith voluntarily prior to detection by the income tax department.

S. RAJARATNAM