Problem in Clubbing Income

Tax queries 1530 views 7 replies

A father deposited an amount of Rs.1000000.00 in the name of his minor son. The interest from this deposit was taxed in the hands of the father as per clubbing income provision. Now, the son is adult, tell me in whose hands the interest will be taxable?

Replies (7)

as the principal belonged to father only , interest would get taxed in hands of father only 

The amount will be taxable in the hands of the father, as this can be contended as a revocable transfer. This is just a deposit and at any time may be withdrawn and can be paid to father. It is really difficult to prove that this is an irrevocable transfer of assets and sec 61 will apply.

In my view it may be possible that the father can take the money and make a gift deed in the name of the son, which will not be taxable in the hands of the son u/s 56(2) being transfer to a lenial descendant. The son may take the money and invest in his own name (assuming that he falls below the maximum amount not chargeble to tax, or is in lower tax bracket than father.

Interest is taxable in the hands of adult son

Hi

According to my Opinion he income from the deposit cannot be charged with the adult son the same to be clubbed in the hands of father.

i think it is tax able to d son because d sec64(1a) is income of minor child and due to specifications of another law

(The Indian Majority Act, 1875)

he becomes a major so d sec64(1a) does not come.

Continue to club the int in the hands of father.........

As long as the source / ownership is with the father, there  is no way he can escape tax liability.  I don't think that gifting the money would solve the problem as clubbing provisions will still apply.


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