CA SHRIYA KULKARNI (SERVICE) (109 Points)
24 June 2010
Hi
I am currently working on a wealth tax return in my office. I had certain queries ...
A person has transfered wealth last year that was taxable, to his children and other people of the family.
I would like to ask if there is any CLUBBING PROVISION under Wealth Tax Act that may apply to that person who has so transfered the wealth.
Thanks
Shriya.
CA Shree Jain
(Chartered Accountant)
(1572 Points)
Replied 24 June 2010
Deemed Assets : Sec. 4
| a) | The value of assets mentioned below shall be clubbed as provided hereinunder : | ||||
| Descripttion of Assets |
Exclusion from clubbing
|
Clubbed with |
|||
| i) | Assets transferred by individual to spouse for inadequate consideration. | i) | Assets transferred in connection with an agreement to live apart | Net Wealth of Individual | |
| ii) | No husband-wife relationship at time of transfer as well as on valuation date | ||||
| ii) | Assets transferred by individual for immediate or deferred benefits of individual or spouse to other persons or Association of person for inadequate consideration. | No husband-wife relationship at time of transfer as well as on valuation date | Net Wealth of Individual | ||
| iii) | Assets held by minor child | i) | Assets held by Minor Married Daughter | Net Wealth of parent whose net wealth is higher, if marriage subsists or else in hands of the parent who maintains minor child. | |
| ii) | Assets acquired out of Minor's Income as referred to in proviso to S. 64(1A) | ||||
| iii) | Minor attains majority on valuation date | ||||
| iv) | Assets held by a physically or mentally handicapped minor child | ||||
| iv) | Assets transferred by Individual under Revocable Transfer to other persons or A.O.Ps | Assets transferred under Irrevocable Transfer | Net Wealth of Individual | ||
| v) | Assets transferred by Individual to son's wife for inadequate consideration. | i) | No father-in-law / mother-in-law / daughter-in-law relationship at time of transfer as well as on valuation date | Net Wealth of Individual | |
| ii) | Assets transferred prior to 1-6-1973 | ||||
| vi) | Assets transferred by Individual for immediate or deferred benefits of individual or son's wife or both to other persons or A.O.Ps for inadequate consideration. | i) | No father-in-law / mother-in-law / daughter-in- law relationship at time of transfer as well as on valuation date | Net Wealth of Individual | |
| ii) | Assets transfered prior to 1-6-1973 | ||||
|
Note : Any accretion to the transferred assets or accumulated income of the transferred assets will not attract the clubbing provisions. |
|||||
| b) | Assets transferred/converted by individual into joint family property. | i) | Assets transferred for adequate consideration | i) Net Wealth of Individual | |
| ii) | Conversion or gifts effected prior to 31.12.69 | ii) On Subsequent Partition of HUF — Share of spouse in converted property to be included in net wealth of individual. | |||
| c) | Gifts by book entries | Money actually delivered at time of entry. | Net Wealth of Individual | ||
| d) | Value of House/part thereof leased/allotted to Individual by Co-op. Society net of outstanding Installment payable to Society. | None | Net Wealth of Individual | ||
| e) | Possession of building taken/retained in part performance of contract (S. 53A of the Transfer of Property Act) or right with respect to building acquired by transaction u/s. 269UA(f) of I.T. Act. | None | Net Wealth of Individual | ||
| f) | Holders of Impartial Asset Estate | None | Net Wealth of Individual | ||
Specific Exemptions — Section 5
Any assets held by public charitable/religious trusts. Exemption however lost and trust property liable to tax in case of diversion of income/property of trust to specified persons or in case of investment in unapproved securities.
Interest of a member in a HUF property,
Any one building used for the residence by a former ruler,
Any heirloom jewellery in the possession of a Ruler,
Assets brought within 1 year prior to return/at any time after return into India by a returning NRI for 7 successive A.Ys. after return to India. Balance in N.R.E. a/c on date of return and assets purchased therefrom also exempt.
One house or part of a house (effective from A.Y. 1994-95) or a plot of land not exceeding 500 square metres (effective from A.Y. 1999-2000), belonging to an individual or a HUF.
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