24 May 2007
Dear Sir, Here are my queries. I would request you to respond as per your convenience Income Tax query for the Assessment year 2007-08
Query #1 As to whether property in Mutual fund inherited on the death of my mother is taxable in my hand during the month of April/May 2007? Query #2 As to whether the amount gifted by me to my wife and son will be taxed in there hands separately, if the transfer of money is on irrevocable basis? Query #3 Whether provisions of sections 60 to 64 are applicable or not? Facts of the case:
I am the only successor of my parents. My father expired in 1976 and my mother died in Jan 2004. She had invested in Mutual Funds (Debt Scheme) and in saving bank long back. The sum total of investment at today’s NAV was over Rupees ten lakhs. The investments in Mutual Fund were made by her in the year 2000-01, 2001-02 and 2002-03. The accretion in bank balance was less than Rs. one lakh till 2007.Total investment made by her was to the tune of over Rs. ten lakhs.
Based on her death certificate as well as survivorship certificate, the Mutual Funds redeemed the units in my favour and the fund was received in my bank account at the latest NAVs. I gifted the whole redeemed amount to my wife and only son. Incidentally my son is no more a minor. He is 20 years of age. They have now invested the funds in various Mutual Funds. As per my understanding the provisions of section 56(2) of the Income Tax Act 1961 are not applicable. The receipt of money without consideration by a relative is outside the scope of the section. I am the lineal descendant of my mother and received the redeemed amount by way of inheritance. Likewise I have gifted the whole of redeemed amount to my wife and son. All the earning henceforth from the investment shall taxed in the hands of wife and son.
29 May 2007
1) inheritence of property is not taxable . It is taxable only when it is sold. 2) In case of gift to wife ,clubbing provisions are applicable but not in case of gift to son
30 May 2007
Actually Mutual fund, instead of transmitting the units as it is, they redeemed the same and send the money to my bank account. Will this amount to inheritance or sale?
02 June 2007
Amount inherited is capital receipt and not revenue receipt and hence not taxable in the hands of receipant . The real issue is the date of inheritance ....if the person dying has made no will , the date of inheritance is the date of death ....if will is there with a executor...the date of inheritance is the date the will is executed ... after the date of inhertance the income becomes the income of the successor
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