Abhimanyu
(CA)
(316 Points)
Replied 16 August 2016
Dear Khushi,
Thanks for the query,
From your question I understand the following,
At one hand gifts are said to be not taxable and on the other hand same act includes it as income.
Now, Khushi we need to understand a few things before we proceed to the answer,
Gift is an act of volunteer transfer of asset without any consideration out of affection or love.
now 56(2)(vii) excludes relatives from tax on such gifts of money or property.
Which means No tax on the value of that article in the hand of recipient.
You would appreciate the fact that Sec. 62 of the act says that if an irrevocable transfer of asset is made than income from that asset will be taxed in the hands of TRANSFEREE and not transferor,
Now Gifting provisions exempt tax over ASSET TRANSFERED, had these provisions were not made tax would have been charged over transfer of such asset via putting assumption that such gift is actually consideration for something and thus such consideration is income to the recipient.
Whereas clubbing of income is attracted on income arising from assets transfered on the basis of a revocable transfer u/s 61 AND NOT U/S 62.
Thus, I think you probably have misinterpreted the two provisions, they have different usage,
Gifting exempts the ASSET
Clubbing exempts Income from such asset, since gift would come under irrevocable transfer of asset, thus no question of clubbing of income arising from such asset in the hands of transferor, but such income will be taxable in the hand of transferee himself only.
Now, lets take a quick example, Say its my marriage ;) and I receive 1Cr. from my Uncle now that would mean,
I am not required to pay tax on such 1Cr. remember that I am the recipient of 1Cr. deptt. assumes that is my income shown as gift(actually this provision is here to curb Black money conversion) but due to certain restrains govt. had to exclude relatives from the section 56(2)(vii).
Now, as it is irrevocable transfer of asset as per sec 62 Income on such 1Cr. will be taxed with me only and not be clubbed.
Now, had it been taxed as Gift in my hands (if i had received it from a say, company on my birthday) the income from such gifted money
CAclubindia
