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Deemed Owner under section 64(1)(iv)

Jacob Abraham (Finance Manager) (35 Points)

29 August 2024

An Individual transfers funds to his son/daughter and the son/daughter transfers it to his / her mother instead of transferring the funds directly from the husband to the wife. She invested such funds in Shares/property. Income from such shares or property - will it attract deemed owner provision under section 64 (1) (iv) of the Income Tax Act

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 30 August 2024

Whether gift deeds are made?

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Jacob Abraham (Finance Manager) (35 Points)
Replied 30 August 2024

No documents were prepared. In whose name is the gift deed to be prepared and how to prepare?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 30 August 2024

Gift deed for gift from father to son/daughter
Second for son/&/ daughter to their mother.

V K Vijayaraghavan (PRACTICE) (206 Points)
Replied 02 September 2024

Deemed Owner Provision Under Section 64(1)(iv) and Indirect Transfers

Yes, the income from the shares or property purchased by the wife using the funds transferred indirectly from the husband to her via the child can potentially attract the deemed owner provision under Section 64(1)(iv) of the Income Tax Act.

This provision states that if an individual transfers assets directly or indirectly to their spouse otherwise than for adequate consideration or in connection with an agreement to live apart, the income derived from such assets shall be included in the income of the transferor.

In your case, the husband indirectly transferred funds to his wife through his child. If the transfer is deemed to be a gift or without adequate consideration, the income from the shares or property purchased with those funds could be considered the husband's income.