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Clarification of sec 56 of It act, 1961

16 April 2017

An individual receives a sum of money from spouse and invests it in bank FD.

According to sec 56 of IT Act, 1961 that sum of money is not chargeable to that individual's 'income from other sources' without any upper limit for tax calculation.

Is it a correct interpretation?

What about the interest generated from the investment?

Is it chargeable to income of that individual or it will be chargeable to the spouse's income?

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4 Replies

(Guest)

interest on fd should be included in spouce income clubbing income provisions apply

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Neeraj dua (Article Assitant) (54 Points)
Replied 16 April 2017

As per section 56(2)(Vii) any some of money received by an Individual or HUF from a person or persons agreegate of which exceeds rs 50,000. Such income would be taxable in handa of such Individual/HUF under the head income from other sourcea

But above provision is not applicable if gift received from a relative & spouse is covered under definition of related.Henxe there is no ques. about applicability of sec 56

Ans to ur 2nd ques.
Sec 56 doesn't apply of slab limit basis it is applicable as per above mentioned limits

Intereat received on FD ll be taxable in the hands of spouse under the head income from other sources

I hope ur query is resolved now.

Neeraj dua (Article Assitant) (54 Points)
Replied 16 April 2017

Clubbing provisions will also apply

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13597 Points)
Replied 26 April 2017

So far as gifted money is concerned being relative there will be taxability in the hands of recipient but interest income will be clubbed in the hands of spouse form whom gift is received and invested in FD.