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Clubbing provisions

This query is : Resolved 

12 August 2014 Facts of the case:::

Husband gifts private limited company's share to his wife in which he is a director.

Wife sells the shares at Rs. 60 lacs. Wife in in 30% tax bracket.

Rs. 50 Lacs is invested in capital gains bonds.

Queries::

1. Is the income - capital gains on sale of unlisted shares - liable for clubbing?

2. If yes, is the gross income rs. 60 lacs or net income rs. 10 lacs liable for clubbing?

3. the capital gains bonds should be invested in whose name? Wife or husband?

4. Alternatively, the shares can be transferred to his mother who is in 20% tax bracket. Is it more benficial than above?

12 August 2014 As per section 64(1)(iv), any income from assets transferred to spouse without inadequate consideration would be taxable in the hands of the person who has transferred the asset to other.
In your case capital gain of Rs. 60 lacs would be taxable in the hands of husband and he can get exemption of Rs. 50lacs invested in capital gain bonds in his own name

12 August 2014 Thank you so much Ca Mohit Bansal for clarification.




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