Payments to relative

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2011 What income tax law says while sum given to relative like father to spouse & to children s? & vice-versa ? & taxability of income generated from such receipts ? i.e. in whose hands income tax will be payable ?

CA Subin VR

CA Subin VR (Expert)
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10 December 2011 Sec 40a 2 b of income tax act

As per the provisions of this section any payment made by an assessee to any of his ‘Relatives’ in respect of any expenditure is disallowable to the extent it is considered excessive, or unreasonable, having regard to the market value of Goods or Services or Facilities etc.

Here the following definitions need to be considered for better understanding:

‘Relative’ is defined to include Husband, Wife, Brother, Sister or any other Lineal Ascendant or Descendant

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2011 but in whose hands income tax will be payable
if that money invested in e.g. in fixed deposit ? & amount given say 50000 to children(major)?

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Hari Beldona

Hari Beldona (Expert)
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10 December 2011 ILLUSTRATIONS.. For Your better understanding

Mr. X transferred an asset worth Rs. 15, 00,000/- to his Elder sons’ wife without any consideration, income earned from such asset will be taxable in the hands of Mr. X.

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