Clubbing of income

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This query is : Resolved

gaurav Kochar (Querist)

03 March 2013 in regards to Income arising to the spouse from an asset transferred without adequate consideration [Section 64(1)(iv)],the section says Where the assets transferred, directly or indirectly, by an individual to his spouse are invested by the transferee in the business, proportionate income arising from such investment is to be included in the total income of the transferor. If the investment is in the nature of contribution of capital, proportionate interest on capital will be clubbed with the income of the transferor. Such proportion has to be computed by taking into account the value of the aforesaid investment as on the first day of the previous year to the total investment in the business by the transferee as on that day. please explain the last sentence regarding proportionate income...can we say that amount to be clubbed=investment by transferee as on 1st day of p.y divided by total investment of business(including other peoples investment ) multiplied by income of business

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

03 March 2013
Amount to be clubbed=

Investment by Transferor as on the 1st Day of P.Y. divided by Total Investment of TRANSFEREE (EXCLUDING OTHER PEOPLE'S INVESTMENT BUT INCLUDING THE AMOUNT OF TRANSFEROR) MULTIPLIED BY INCOME OF THE BUSINESS.

gaurav Kochar

gaurav Kochar (Querist)

04 March 2013 shdnt it be multiplied by the income of business only attributable to transferee as other people may also have a stake in the profits of business

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

04 March 2013 Other people's may be charging interest or under a business consideration and net profit is arrived after deducting the same.
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