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Clubbing of pin money

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)

30 July 2014

Who is liable to pay tax on interest earned from FD, which was created by wife using PIN money received from Husband?

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11 Replies

Anubhav (Chartered Accountant) (429 Points)
Replied 30 July 2014

As per Sec 64(1)(iv) this income will be taxed in the hands of transferor. In this case husband.

AJH & CO.

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CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)
Replied 30 July 2014

But in the case of " R.B.N.J Naidu Vs CIT (1956) 29 ITR 194 (Nag) and R.Dalmia Vs. CIT (1982) 133 ITR 169 (Delhi) " , it says income from investment out of pin money cannot be clubbed.

1 Like

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 30 July 2014

100% i can say clubbing provisions wont attract here.

2 Like

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 30 July 2014

1. Income from Investment out of PIN money will be taxable in the hands of Wife

2 Like

Reksin P A (Audit Assistant) (27 Points)
Replied 30 July 2014

Clubbing provision does not attract to income from investment out of pin money

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Fenil Shah (Audit & Tax Executive) (402 Points)
Replied 30 July 2014

Pin money received by wife from her husband is not treated as an income in the hands of wife & so if she saves from Pin money & invests the same, the income from Investment will be taxed in the hands of wife & no clubbing provisions will apply here.

Rupesh Soni (Taxation Consultant & CA final student) (504 Points)
Replied 30 July 2014

not taxable...no clubbing in hnd of husband..but pin mony must b reasonable amt...inv is resonable amt not tooo much huge amt

Rohit Kapoor (CA Final) (543 Points)
Replied 30 July 2014

ncome from Investment out of PIN money will not attact clubbing provisions.

Nikhil (student) (27 Points)
Replied 30 July 2014

Is there any limit for the amount of PIN money investment?

vishesh (student) (21 Points)
Replied 31 July 2014

The concept of pin money is that of a personal allowance hence any investment done for it would be the income of the wife only. However the assessing officer may take judgement regarding the amount of such investment and classify it accordingly.