CAF-2 · Chapter 12 · Question 12 of 15
Mr. A transferred a commercial plaza to his wife solely out of natural love and affection (without adequate financial consideration). The property generates a rental income of Rs. 2,000,000 annually. Under Section 90 of the Income Tax Ordinance, 2001, who will be taxed on this rental income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) Mr. A (the transferor), because the transfer to a spouse was made without adequate consideration.
Explanation
Where property is transferred by a person to his spouse (or minor child) without adequate consideration or not in connection with an agreement to live apart, the property income will be treated as the income of the transferor.
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