Clubbing of income

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2014 My Client Mrs X received a gift from Her husband Mr X a Land of Rs 5 laces with out consideration and she run a business on such land and earn profit of Rs 2 Laces what are the consequence of above situation in the taxation of Mr x and can Mrs x paid the money to Mr through supplementary deed...

CA. Gireesh Tawri

CA. Gireesh Tawri (Expert)
Follow

11 October 2014 Income of Mrs. X from Business will be taxable in the hands of Mrs. X only, however as per Section 64(1) (iv) of the Income Tax Act, 1961, in computing the income of any individual, there shall be included all such income as arises directly or indirectly to the spouse of an individual from assets transferred directly or indirectly to the spouse by the individual without adequate consideration.

Thus, in view of this provision the income of the wife gets clubbed with the income of the husband if the assets are transferred without any consideration. This provision would equally apply to such husband who receives certain money or assets from his wife without any consideration.