Apllicablity of Clubbing Provisions

This query is : Resolved

CA Sanjay Baheti (Querist)
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30 August 2010 One of my client being Individual carrying on Propietorship concern engaged in Manufactring of Machinery Parts.The said concern is covered under Tax audit for the year 2009-10. Proprietor is female. now during year under audit the firm has booked salary of Rs.2,50,000/- being paid to her husband who is looking after the business activities & Techno cum commercial person.After consdering the Investments to the extent of Rs.100000/- u/s 80c of I.T.Act the firm is not liable for TDs deduction u/s 192 of I.T. Act.
Now the query is whether the said salary paid to her husband is attracted the clubbing provisions u/s 64 of I.T. Act or not.

futher the said salary is disclosed as payment to specified persons u/s 40A(2)(b) of I.T.Act in Tax audit report.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 August 2010 Payment has rightly been disclosed U/s 40A(2)(b).

If the Husband is having Technical or Professional Qualification as required in that kind of business, the income may not be clubbed in the hands of the proprietor. In case question arises, reasonableness of the remuneration paid to him should be proved by your client.

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