Understanding the Provisions of Clubbing of Income

Book Details

Chapter 1. Introduction	�
Clubbing of Income Means	1
For example:	1
Its Object	1
The Legislative Changes	1
Scope of the Provisions of Section 64	2
Clubbing under relevant head	3
Glossary	3
Sections covered under Clubbing of Income:	3
Chapter 2. Transfer of Income Without Transfer of Asset	�
Nature of Transaction	6
Income to be clubbed in the hands of	6
Conditions	6
Chapter 3. Income Arising from Revocable Transfer of Assets	�
Meaning of Revocable Transfer [Section 63]	13
Specified Person	13
Specified Scenario	13
Clubbing of Income	13
Conditions	14
Exception to Section 61 [Section 62]	14
Chapter 4. Exceptions where Clubbing Provisions are not Attracted even in Case of Revocable Transfer	42
Chapter 5. “Transfer� and “Revocable Transfer� Defined	59
Chapter 6. Transfer of Assets - for Benefit of Spouse Etc.	�
Clubbing of share income from firm	72
Spouse as Partner Through a Trustee	73
Professional Income Escapes Clubbing Provisions	73
Chapter 7. Income by Way of Salary, Commission, Fees or Remuneration Paid to Spouse from a Concern in which an Individual has Substantial Interest	�
‘Substantial Interest’ by an Individual - Meaning	83
Exception - No Clubbing if Remuneration is due to Technical or Professional Qualifications:	84
Technical or Professional Qualification:	85
Where both Husband and Wife have Substantial Interest and both are getting Remuneration from the concern	87
When both Husband and Wife have Substantial Interest	88
Exceptions to clubbing	89
Conditions	90
Chapter 8. Income of Individual to Include Income of Spouse, Minor Child, Etc	109
Chapter 9. Income Arising to the Spouse from an Asset Transferred Without Adequate Consideration	�
Statutory requirement	122
Asset Transferred to Spouse [Section 64(1)(iv)]	123
Income to be clubbed in the hands of	124
Capital Gain on Sale of Transferred Assets	126
Appropriation when transferred asset is invested in a Business	126
Income arising from Accretions to Transferred Assets	126
Applicability to Second Generation Income	126
When section 64(1)(iv) is not applicable [i.e., Exceptions to clubbing]	127
Frequently Asked Questions (FAQ)	132
Chapter 10. Income of Individual to include Income of Spouse	159
Chapter 11. Income Arising to Son’s Wife (i.e., Daughter-In-Law) from the Assets Transferred Without Adequate Consideration by the Transferor, i.e.,Father-In-Law/Mother-In-Law	�
Transfer to Son’s Wife [Section 64(1)(vi)]	171
Income to be clubbed in the hands of	172
Exceptions to clubbing	172
Chapter 12. Clubbing of Income from Assets Transferred to a Person for the Benefit of Spouse	�
Specified scenario :	185
Income to be clubbed in the hands of	185
Conditions	186
Chapter 13. Income from Assets Transferred to a Person or Association of Persons for the Benefit of Son’s Wife	�
Income to be clubbed in the hands of	194
Chapter 14. Minor Child’s Income Clubbed with the Income of Parent	�
The Object of introducing Section 64(1A)	197
The interim report on Tax Reforms for December, 1991, submitted by Dr. Raja J. Chelliah Committee reads as under (at para 6.38 of the Report):	198
Section 64(1A) not violative of articles 14 and 19 of the Constitution of India	200
Child in relation to an individual [Section 2(15B)]	201
Minor child’s income (less than 18 years old) clubbed in the hands of that parent whose total income (excluding the income of the minor) is greater	201
Chapter 15. Conversion of Self-Acquired Property into the Property of a Hindu Undivided Family	�
“Any sum of money� is property - Clubbing provisions of section 64(2) can be said to be applicable to the HUF in respect of sum of money received without consideration	223
Transfer of Asset to Hindu Undivided Family (HUF)	223
Nature of Transaction	224
Clubbed in the Hands of	224
Conditions/ Exceptions	224
Chapter 16. Liability of Person in respect of Income Included in the Income of Another Person	�
Applicability	252
Impact	252
Chapter 17. Exceptions to Clubbing - When Minor Income will not be Clubbed	255
Income of a disabled child (disability of the nature specified in section 80U)	255
Income earned by manual work done by the child	255
Income earned by a minor child on account of manual work done	255
Income earned by minor child on account of application of any skill,talent or specialised knowledge and experience	255
Chapter 18. Cases in which Clubbing of Income is not applicable	256
Income transferred before marriage	256
Income derived from clubbed income	256
Saved money is not asset transferred	256
Chapter 19. Claiming TDS for Income under Clubbing Provisions	257
Chapter 20. Clubbing of Income – Set-Off of Loss	�
Income includes loss	259
Clubbing of Negative Incomes (Losses)	259
Chapter 21. Clubbing of Income – Section 263	263
Chapter 22. Clubbing of Agricultural Income of the Minor	�
Agricultural income of minor son of assessee has to be included in income of assessee for purpose of determining rate of income-tax applicable to income of assessee	266
Agricultural income of minor children cannot be clubbed in hands of assessee (parent)	267
Chapter 23. Applicability of Clubbing Provisions to Family Trusts	�
Clubbing of Income and Private Trusts	269
Clubbing with Spouse - Section 64(1) (iv) Gift to the spouse – Directly or Indirectly – through Trust	269
Dissolution	270
Chapter 24. Computation of Income to be Clubbed	�
Clubbing Head	277
Deduction under Chapter VIA	277
Clubbing of Negative Income	278
Chapter 25. Interplay of Clubbing Provisions and Capital Gain Provisions	�
‘Income’ includes capital gains - The word ‘income’ in section 64(1)(iv) includes capital gains arising from sale of transferred assets	280
Chapter 26. Frequently Asked Questions (FAQ)	282

About the Author

Ram Dutt Sharma

Ram Dutt Sharma was born on 27th June, 1958 in Narnaul, Haryana. He got his post-graduation from M.D. University, Rohtak in 1980. He joined the Income-tax Department in the year 1983 and retired as Income Tax Officer on 30.06.2018. He worked at various stations of North-West Region of Income-tax Department. He has wide experience of all wings of Income-tax Department such as Assessment Unit, Special Range, TDS Wing, Investigation Wing, etc. He has been Contributing articles and addressing on topics relating to Income Tax at NADT Regional Campus, Chandigarh & Bhopal. He has also addressed number of seminars organized by the Income-tax Department, Chartered Accountants, Advocates and various Trade Associations.

He is recipient of first-ever Finance Minister's Award 2017, the Income Tax Departments highest honour for sustained devotion, commitment to duty & promoting excellence in the field of Direct Taxation at National Level. The Hon'ble Union Finance Minister, Shri ArunJaitley conferred this Finance Ministers Award for Excellence for his meritorious services at VigyanBhawan, New Delhi on 24.07.2017.

Awarded by Hon'ble Member (Revenue& TPS), CBT, Special Secretary to the Government of India Certificate of Appreciation for his contribution recognized and included in the chapter Miscellaneous Orders in Let Us Share A compilation of Best Practices & Orders Vol. VIII released on 31stOctober, 2016.

View other books from Enterprise Information Systems and Strategic Management