transfer of debenture without adequate consideration

This query is : Resolved

CA Abhishek Singh (Querist)
Follow

03 April 2009 mr. x transfers 1000 14% debenture of rs. 100each to his wife mrs. x without any consideation in 2003. mrs x lends accumulated interest to mr. b and receives interest of rs. 12000/-

my question is interst on debenture will be clubbed in the hads of mr. x but what about interest on money lent by mrs. x, it will be taxable in hands of mr.x or mrs. x?

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
Follow

04 April 2009 First part:

Debentures transfered without consideration. Interest on debenture interest will be clubbed in the hands of mr.x.

Second Part:

With reference to amount lend by mrs.x she has given money. Therefore the interest is received taxable as income in the hands of mrs.x. if you can prove to the department that the interes on debentures has been spent and her savings has been given as loan.

Second Part :

If u are unable to prove as above then the interest is also taxable in the hands of mr.x.