CA Deepika Chopra (PRACTICING CHARTERED ACCOUNTANT) (32 Points)
24 January 2013I just wanted to enquire in case court gave an order of keeping some amount aside for sake of minor and the income on that cant be used by parents. It will be handover to the minor when he attains majority. Is the income taxable in the hands of parents ? Kindly justify the answer.
Akanksha Jain
(Article)
(690 Points)
Replied 24 January 2013
Yes,
Income is to be clubbed.. because as per income tax act, taxability of income arises when the income is earned not when the earned income is used.. in your case income is earned when that person is minor so as per my opinion income is to be clubbed
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 January 2013
FOR APPLICABILITY OF CLUBBING PROVISON THERE SHOULD BE "INCOME" AS PER SEC 2 OF INCOME TAX ACT.
From ur descriptttion it does not seems that minor has earned any income and only to keep aside money doesnt amount to income so in my opinion there is no q of applicabilty of clubbing provision.
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 January 2013
| Originally posted by : Akanksha Jain | ||
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Yes, Income is to be clubbed.. because as per income tax act, taxability of income arises when the income is earned not when the earned income is used.. in your case income is earned when that person is minor so as per my opinion income is to be clubbed |
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There is no income as per income tax which is earned by minor...therefore clubbing provisons do not apply at all.???????
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 24 January 2013
Agree with Akanksha Jain...... But as a tax planning tool, it is advisable to invest the same in PPF, because interest on PPF will be exempt.
Akanksha Jain
(Article)
(690 Points)
Replied 24 January 2013
| Originally posted by : TusharSampatM.Com CA,CS-FINAL | ||
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There is no income as per income tax which is earned by minor...therefore clubbing provisons do not apply at all.??????? |
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may be income is earned from the investment (money which is kept aside is invested in the name of minor)
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 January 2013
| Originally posted by : Akanksha Jain | ||
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may be income is earned from the investment (money which is kept aside is invested in the name of minor) |
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Reading carefully the query raised by deepika the question doesnt talk about incremental income for money kept aside...its asking about the principalsum of money kept aside and dat too due to courts order...q of clubbing of incrmental income does not arise at present???????
Akanksha Jain
(Article)
(690 Points)
Replied 24 January 2013
| Originally posted by : TusharSampatM.Com CA,CS-FINAL | ||
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Reading carefully the query raised by deepika the question doesnt talk about incremental income for money kept aside...its asking about the principalsum of money kept aside and dat too due to courts order...q of clubbing of incrmental income does not arise at present??????? |
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the query is..
"keeping some amount aside for sake of minor and the income on that cant be used by parents"
its income earned from the money which is kept aside..
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 January 2013
| Originally posted by : Akanksha Jain | ||
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"keeping some amount aside for sake of minor and the income on that cant be used by parents" its income earned from the money which is kept aside.. |
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My opinion is in relation to principal sum of amount kept aside (Highlighted in blue) whic wont be clubbed at all as keeping amount aside is no income earned at all as per def of income under sec2 of income tax act.
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 24 January 2013
Dear Tushar
The PPF is a case of such investment in which the income accrues to Minor only(if the account is opened on his name) but the same is clubbed in the hands of parent(earning higher income)
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 January 2013
| Originally posted by : Sumit Grover | ||
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Dear Tushar The PPF is a case of such investment in which the income accrues to Minor only(if the account is opened on his name) but the same is clubbed in the hands of parent(earning higher income) |
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Agree with ur view bt in query is silent on which type of investment is made and wat income is accruedor earned......and PPF amount in capital sense is not clubbed as itscapital in nature and not income as per sec2 of it act.
IMAM
(ARTICLE ASST.)
(371 Points)
Replied 24 January 2013
HI
INCOME EARNED ON THE MONEY TAKE ASIDE SHOULD BE CLUBED IN THE HANDS OF PARENTS WHO HAS HIGHER INCOME. DONT GET PANIC BECAUSE ABOVE DISCUSSION.
THANK YOU
CA Deepika Chopra
(PRACTICING CHARTERED ACCOUNTANT)
(32 Points)
Replied 25 January 2013
Thanks actually
A minor has received an amount through court order for his future and can use that amount after attaining the age of 18 years. In the mean time the amount is kept with bank under guardian ship of his mother.
In such case whether the income earned before 18 year of age of minor, will be taxable in the hand of mother who is independent assessee with IT Department.
thats what i actually wanted to know but still confused with vareity of answers
Akanksha Jain
(Article)
(690 Points)
Replied 25 January 2013
Principal amount kept with bank is taxable in the hands of parents who earned that income.. it is not the income of minor..
If a bank is giving interest on such investment.. it is the income of minor and is clubbed with the income of parents.. (father/mother whose income is high before clubbing)
sowmya srinivas
(partner)
(25 Points)
Replied 25 January 2013
In my opinion there is no tax ability in the hands of parents,because as per court order even the income arising from the amount set aside cannot be used by the parents and it has also to be accumulated in minors A/C till he/she attains majority.So there is no income in parents hands to get taxed.
CAclubindia
