A assessee having turnover of Rs.80 lacs upto september 2010. on 1st Oct 2010 he withdraw all his capital and gave loan equal to his capital account through separate account payees cheque. His wife introduced this amount in the firm as capital and take over all his husband's business and become a prop. of the firm. My query is : a) is this is right way? b) whether any gift tax problem arises? c) the income of his husband is less in comparison to her income at year end, whether any clubing of income arises? She is not paying any interest to the husband. d) whether two tax audits will be done? i.e. upto 30th september her husband's business and from 1-10-2010 to 31st march 2011 of her business or from 1-4-2010 to 31-3-2011 as a whole business. Please guide
19 September 2011
If amount given as loan to wife then the transaction is OK. It dose not involve any issue of gift tax, clubbing as the amount is by way of loan. Further you have to carry out two atx audits for both periods as the assessee are different.
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