If the wife of an the assessee is working and getting salary(which is not attributable to her skill) it is to be clubbed in the husbands hands only if he has substantial interest(20% in shares of the company) along with relatives?
If he gifts debentures to wife and she gets interest on debentures to be clubbed with husband? here the substantial interest criteria does not apply?
Income Tax Act provides different treatment for these two different transactions.
Salary to Spouse is covered under Section 64(1)(ii) which requires assessee to have substantial interest.
While gift of debentures to spouse is covered under section 64(1)(iv) which doesnot have any such condition of substantial interest.Therefore, in case of gift of debentures to the spouse, interest thereon shall be clubbed in the hands of transferor, even if the transferor doesnot have substantial interest in the company.
You may also refer the attached file for further clarification.
CAclubindia
