Clubbing of income

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Radhika Singhal (Querist)
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05 March 2012 Hi Members,

If an assesee buys a house property in his wife's name by giving loan to his wife and in consideration takes jewellery from her. Then whether the renatal income is to be clubbed in assesee's income or it is part of wife's income.

Please give relevant case study (if any) or related section or any other appropriate reference

CA. Hari Kishan

CA. Hari Kishan (Expert)
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05 March 2012 Should it be justified that the loan is paid to wife and that she is paying a certain interest amount on the same (@ market rates).. then it shall be her house property and then there shall be no clubbing provision to attract.

Radhika Singhal

Radhika Singhal (Querist)
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06 March 2012
thanks a lot

but What if instead of loan wife gives jwellery for buying house property to husband. Say the new property is pf Rs. 10 lakh and wife in return gives Rs. 10 Lakh jwellery to her husband. whether the rent income will be clubbed under wife's income . If yes, for this transfer of jwellery to husband , whether any other tax ( viz sales tax or vat) is applicable, since the amount is more than 10 lakh?

CA. Hari Kishan

CA. Hari Kishan (Expert)
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06 March 2012 Should the wife transfer jewellery to husband worth 10 lakhs,, she will be liable to pay Capital gains tax on the same.. which could in my view avoided.

Also even if the wife transfers to husband jewellery for purchase of the house and rental income is derived clubbing of income should not attract.. as the funds are ultimately sourced from wife account.. but remember the capital gain tax shall attract.. also gains made from sale of jewellery shall be eligible for exemption under section 54F. The same may be examined.

Radhika Singhal

Radhika Singhal (Querist)
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06 March 2012 thanks a lot sir!!!!:)

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