Taxability of one time alimony received through court

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2017 Hi,

I want to know about the taxability of one time alimony received at the time of divorce through court.The alimony amount in mentioned in the divorce deed of the court. Whether it is a taxable income in the hands of the recipient?

Sunil

Sunil (Expert)
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21 June 2017 In my mind, until a divorce decree is passed there is still a subsisting relationship between the spouses. In most mutual consent cases, only after the amount is deposited the divorce decree is passed. Till such time the receiver is receiving money from the spouse and will qualify to be receipt from relative.

After dissolution of marriage, the money belongs totally to the spouse and since relationship ceases there should be no clubbing u/s 64.

For alimony received it is important that the husband wife relationship should be subsisting when money changes hands. After the money has changed hands and court passes decree to dissolve marriage, there is no more husband wife relationship and therefore tax on interest of the money will be paid by wife only and not clubbed with husband.

Querist : Anonymous

Querist : Anonymous (Querist)

22 June 2017 Thanks ..does that mean only the interest part is taxable and not the amount received as alimony?
While filing the return any interest received on investing the amount of alimony is to be shown under the head "other sources"

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Sunil

Sunil (Expert)
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22 June 2017 Depends on when alimony is received or liable to be received. If money was deposited in court or paid to receiver before dissolution of marriage, then no tax on alimony as there is a subsisting husband wife relationship. For any interest earned before dissolution it will be clubbed. Normally when we say deposit in court, normally it is lying on account of receiver and at directions of court it is placed in a nationalised bank and earns interest. Once the dissolution of marriage is through no more clubbing. Of course if the spouses are living apart by an agreement to live apart due to divorce proceedings, then no clubbing.

Taxable interest is always shown under other sources as the character of this interest is not an income from business or profession. Only licensed money lenders can show interest as a business income.