Very often it is found that a non-resident maintains a bank account jointly with his wife and/or children. Similarly, it is seen that a nonresident Indian buying shares or debentures or house property or other movable or immovable property, keeps them in his own name jointly with his wife or any other member of the family. In this connection, a non-resident should remember that the maintenance of joint bank accounts or holding of joint investments alone would not make the income liable to assessment separately in the hands of the persons in whose name the joint accounts are kept or who hold the joint investments. Thus, the mere fact that an account is held jointly or that an investment is held by two or more persons together would not affect the liability to income tax or wealth tax. The main criterion of deciding as to the correct persons who are to be responsible for paying income tax in respect of the income ofjoint accounts or joint investments is the true ownership of such accounts or investments. For example, if a nonresident Indian, out of money belonging to him, is operating a bank account or a bank fixed deposit account jointly with his wife, he alone would be liable to income tax, if any, in respect of the income from such an account. Likewise, if a non-resident Indian out of funds belonging to him makes a joint investment in shares of Indian companies, he alone, would he liable to income tax, if any, in respect of the dividend income from shares so held. If, however, a joint bank account or joint investment is out of money belonging to the persons actually owning the funds, then the extent of their individual ownership in the joint account would be considered for income tax and wealth tax for individual tax purposes separately.
For example, if a non-resident Indian invests Rs. 4,00,000 in the HUDCO Bonds, and his wife invests Rs. 2,00,000 out of funds belonging to her in buying HUDCO Bonds and these Bonds worth Rs. 6,00,000 are held in joint names of the husband and the wife, the income on such Bonds would be liable to be treated separately in the individual assessment of the husband and the wife in the ratio of 2:1.