Clubbing of Income

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AnandKumar (Querist)
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26 December 2010 According to Seciton 64(1)(ii) remuneration of a spouse from a concern in which the other spouse has substantial interst is to be clubbed in the hands of a person who has substantial interst in the concern. My doubt is about where husband is having substantial interst in the frim. Wife automatically having substantial interest because the definition of relative given in section 2 states relative means Husband, wife,etc. in this case the holding of husband should be considered for calculating holding of wife & hence both are having substantial interst.
how to deal with such situation i.e. either husband is having substantial interst or both are having substantial interst?

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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26 December 2010 husband..

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 December 2010 Section 64(1) starts as
In computing the total income of
any INDIVIDUAL,
there shall be included all such income as arisen directly or indirectly-

(ii) to spouse of such individual .... from a concern in which such INDIVIDUAL has a substantial interest.

From the above it seems that Husband is having substantial interest so income of wife, if any from that concern, should be clubbed with the income of the Husband.

But in my opinion things are not so...

Please also refer Explanation-1
Which defines how to select an INDIVIDUAL? or
Who will be the INDIVIDUAL? out of Husband & Wife.

Excluding that income -whose total income is greater,
will be deemed as the INDIVIDUAL.

So clubbing is possible in the hands of the spouse having more total income (excluding the income from the concern)

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