Clubbing of income u/s 64
This query is : Resolved
08 March 2013
Husband gift cash of Rs 4,00,000/- to his wife. Wife purchased a plot with this amount. She sold the plot after six year for Rs. 10,00,000/- when indexed cost comes to Rs 8,00,000/- . Now the capital gain arises of Rs. 2,00,000/- will be clubbed with the income of husband. Now wife deposited Rs 10,00,000/- (sales consideration form plot) with bank and earns the interest of Rs 90,000/- . Now is this interest income will be clubbed withe the income of husband or not?? If yes then what amount will be clubbed??
09 March 2013
Interest income can't be clubbed ,meaning thereby it has to be assessed in the hands of the wife only.
Citation:- (2001) 252 ITR 126(Mad).
Citation:- (2001) 252 ITR 126(Mad).
09 March 2013
Yes only capital gain to be clubbed in the hands of husband...interest earned can not be clubbed in the hands of husband it is taxable in the hands of wife only.
09 March 2013
Thanx for replying sir!! But in the case of CIT v/s smt pelleti sridevamma (1995) 216 ITR 826 (SC) it was held that if the asset ransferred has changed the shape and identification the income from such such changed asset shall be clubbed
09 March 2013
The cash gifted by husband has changed the shape in the form of plot...and so income earned from plot i.e.capital gain has been clubbed. but the interest has been earned from the sale consideration which is deposited and such sale consideration is not gifted by husband so interest earned is not to be clubbed.
09 March 2013
if suppose sir there is no cap gain in above example , wife sold plot for RS. 400000 in the same year and deposit rs 400000 (sales consideration in FDR with bank, then also interest income of wife will not be clubbed with income of husband??
09 March 2013
Yes then also interest income will not be clubbed....because cash gifted has taken a form of plot and income from plot only could be clubbed...interest has been earned on sale consideration which is not gifted by husband....In nutshell income on income not to be clubbed...
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