CA Krishna Chaitanya M (Chartered Accountant) (463 Points)
27 November 2011Assesse wants to transfer 500000 worth money to his major son , assesse doing business of money lending, his business income purely relates to interest on money lending. To reduce tax burden he wants to transfer 500000 worth money with out consideration to his major son, so that interest amount receivable on such 500000 rs, assessed with his son's income, is it sustainable in law.
is there any provision for clubbing of son's interest income received on Rs.500000to his father's income.
CA VISHAL RANA,CS,B.Com,AMFI
(Chartered Accountant in Whole Time Practice)
(4354 Points)
Replied 27 November 2011
Income arising from asset transfer to major son without adequate comsidaration will not cllubbed in the hands of father....it still be taxable in the hands of majar son.....it will clubbed in the case of minor son
Z
( )
(2965 Points)
Replied 27 November 2011
According to the provisions of sec 60, if an assesse transfers the income without transferring the source of income (i.e asset) , then such income will be included in the total income of the transferor. If the assesse transfers the asset and further if such a transfer is irrevocable then income arising from such asset will not be included in the hands of assesse but it shall be charged to in the hands of the major son.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 27 November 2011
Major son is considered to be a relative as defined in explanation to sec 56(2).so even if it is transferred without adeqauate consideration in my opinion it is nt txable.
PLs correct me if im worng.
CA VISHAL RANA,CS,B.Com,AMFI
(Chartered Accountant in Whole Time Practice)
(4354 Points)
Replied 27 November 2011
Tushar you are absolutey right brother but he is asking about clubbing provisions
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 27 November 2011
@ Vishal - ther is no question of clubbing also since he is a major son and no sec 64(2) applies to minor son clubbing.
Rama c murnal
(C A FINAL)
(116 Points)
Replied 28 November 2011
Vishal could u pls let me know ....an assessee s liable to service tax he started his business in march 2011 he s not yet paid service tax and nor return filed whether he has to pay interest of 13 % till now?
Z
( )
(2965 Points)
Replied 28 November 2011
I could be wrong but I am of opinion that such an income can also be clubbed , it depends on the nature of the transfer.
Clubbing provisions do not apply in case transfer is irrevocable.
Clubbing provisions do apply even in case of irrevocable transfer for those transactions which have been specifically mentioned for eg in 64 series (minor,spouse etc.)
"According to the provisions of sec 60, if an assesse transfers the income without transferring the source of income (i.e asset) , then such income will be included in the total income of the transferor. If the assesse transfers the asset and further if such a transfer is irrevocable then income arising from such asset will not be included in the hands of assesse but it shall be charged to in the hands of the major son."
In the querry the querist has not mentioned the nature of intended transfer.
If am wrong please clarify in detail.
Resham
(Carpe Diem !!!)
(6535 Points)
Replied 29 November 2011
on the same lines of the above answer, assuming the transfer is irrevocable (to avoid tax in the hands of assessee himself), the income will be taxed in the hands of the major son.
DEV
(OFFICER)
(22 Points)
Replied 19 August 2018
Is there any section of IT Act which specifically offers exemption to such transaction, or any case law which has decided the case of this type.
CAclubindia
