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Clubbing of income sec 64

harsh (student) (125 Points)

11 April 2016

in case an assesee transfers an asset to his brother's minor child then income derived from such asset shall be includible in whose hands ?

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5 Replies

Deval M. Thakkar (Student CA Final and Article Assistant at Talati & Talati Ahmedabad) (368 Points)
Replied 11 April 2016

It is included in the Income of father of minor child.

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harsh (student) (125 Points)
Replied 11 April 2016

Okk what if assessee's brother transfers an asset to assessee's wife then the income belongs to whom ?

Deval M. Thakkar (Student CA Final and Article Assistant at Talati & Talati Ahmedabad) (368 Points)
Replied 14 April 2016

Same implication as above.

Vikas Shah (Articled Assistant) (41 Points)
Replied 14 April 2016

Dear Harsh,

Simple concept of clubbing is if an assessee gives gift to his/her relative then income derived out of such gift shall be clubbed with the income of assessee. Now in your examples, wife of brother or minor child of brother are not covered in the definition of relative, hence question of clubbing does not arise. However, as per section 64(1A), all incomes accruing to minor child shall be clubbed to the income of parent having higher income (except the income earned by minor child for manual work done by him or from activity involving application of his skill, talent or specialised know-ledge and experience). So in the given case, income derived from gift received from uncle will be clubbed to child's Father's/Mother's income. Although, income derived from gift received from brother in law would not attract the provisions clubbing and hence will be taxed to the wife only. (Note that brother's wife/minor child are not covered under the definition of relative and hence gifts, if exceeded Rs 50,000 p.a., will be taxable.)