Contraversy between sec 56(2) & 64
This query is : Resolved
13 July 2012
IF WIFE HAS GIFTED MONEY FROM HER ACCOUNT TO HER HUSBAND AND TO HER DAUGHTER IN LAW ( UNDER SEC 56(B-2 ),AND THEY ARE INVESTING THIS FUND OF GIFT IN REAL ESTATE OR IN TAX FREE BOND WHAT WILL BE THE SCENARIO AS PER SEC-64 ??? ( CLUBBING PROVISIONS ), WHERE AS INCOME FROM TAX FREE BOND IS TAX FREE, AND INVESTMENT IN REAL ASSET IS NOT PRODUCTIVE...????
13 July 2012
1. Please understand that Section 56 and Section 64 are entirely different.
Section 56 applies to the RECIPIENT, whereas Section 64 applies to the TRANSFEROR.
2. A gift may be exempt in the hands of the recipient by virtue of Section 56(2)(vii), however income arising from such gift may be clubbed in the income of the transferor u/s 64.
3. In view of the above, answer to your query is as under:
(a) Gift received by an individual from his wife and gift received by an individual from her mother-in-law are exempt in their hands.
Clubbing provision shall apply to the transferor.
(b) Gift invested in real estate - income arising from such investment shall be clubbed in the hands of the transferor (the lady making the gift)
(c) Interest on tax free bond shall be also be clubbed. However, since the same is exempt, there will be no impact.
(d) Income earned on income is NOT to be clubbed.
Income earned by investing the interest from bonds will NOT be clubbed.
Section 56 applies to the RECIPIENT, whereas Section 64 applies to the TRANSFEROR.
2. A gift may be exempt in the hands of the recipient by virtue of Section 56(2)(vii), however income arising from such gift may be clubbed in the income of the transferor u/s 64.
3. In view of the above, answer to your query is as under:
(a) Gift received by an individual from his wife and gift received by an individual from her mother-in-law are exempt in their hands.
Clubbing provision shall apply to the transferor.
(b) Gift invested in real estate - income arising from such investment shall be clubbed in the hands of the transferor (the lady making the gift)
(c) Interest on tax free bond shall be also be clubbed. However, since the same is exempt, there will be no impact.
(d) Income earned on income is NOT to be clubbed.
Income earned by investing the interest from bonds will NOT be clubbed.
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13 July 2012
THANX MR.BHARADWAJ.
YOU HAVE TRIED TO RESOLVE MY QUERRY IN BEST POSSIBLE MANNER.IT IS ME TO WHOM MY WIFE HAS
GIFTED AND I HAVE INVESTED IN PFC/IRFC/HUDCO TAX FREE INVESTMENT.YOUR ANSWER (C) &(D) SOLVED MY QUERY AS WELL OF MY DAUGHTER IN LAW TO WHOM MY WIFE HAS GIFTED AND INVESTED IN THE SAME MANNER IN TF BONDS.
SO FAR (B) OF YOUR ANSWER IS CONCERNED, I WANT SPECIFICALLY YOR ASSISTANCE AS TO MY SOME PORTION OF GIFTED INVESTED IN BUYING FLAT,WHICH IS NOT GOING TO GENERATE ANY INCOME.I AM MORE CONCERNED AS IT WOULD BE BURDEN OF TAX ON MY WIFE IF CARE IS NOT TAKEN.
YOU HAVE TRIED TO RESOLVE MY QUERRY IN BEST POSSIBLE MANNER.IT IS ME TO WHOM MY WIFE HAS
GIFTED AND I HAVE INVESTED IN PFC/IRFC/HUDCO TAX FREE INVESTMENT.YOUR ANSWER (C) &(D) SOLVED MY QUERY AS WELL OF MY DAUGHTER IN LAW TO WHOM MY WIFE HAS GIFTED AND INVESTED IN THE SAME MANNER IN TF BONDS.
SO FAR (B) OF YOUR ANSWER IS CONCERNED, I WANT SPECIFICALLY YOR ASSISTANCE AS TO MY SOME PORTION OF GIFTED INVESTED IN BUYING FLAT,WHICH IS NOT GOING TO GENERATE ANY INCOME.I AM MORE CONCERNED AS IT WOULD BE BURDEN OF TAX ON MY WIFE IF CARE IS NOT TAKEN.
14 July 2012
You have invested some portion of the gift in a house property. You say that no arise shall arise which means you do not plan to let out the house property.
Now, there are 2 scenarios here:
1. If in the future you let out the house property, the rental income shall be included in the total income of your wife.
2. If in the future you sell the house property, the capital gain shall be included in the total income of your wife.
Now, there are 2 scenarios here:
1. If in the future you let out the house property, the rental income shall be included in the total income of your wife.
2. If in the future you sell the house property, the capital gain shall be included in the total income of your wife.
14 July 2012
Out of the receipt of Rs.6107427,my wife gifted me Rs.1050000.During the Fin Yr after receipt of gift i have invested Rs.2872000 in TF Bonds & 400000 in installments of flat.Out of my 10 years Lock In investment in TF Bonds if i declare total GIFT of Rs.1050000 in these bonds.Would this investment alone justify my planning as income is tax free and income on income would not have any impact in clubbing u/s 64 ??.All the other recipients(Rs.1050000/250000/to 2 sons & 443000.to both the DIL) have planned same strategy.Can we proceed accordingly ??
23 July 2012
SIR,
I HAVE BEEN WAITING FOR YOUR EXPERTIZE COMMENT IN TO THE MATTER.
I HAVE BEEN WAITING FOR YOUR EXPERTIZE COMMENT IN TO THE MATTER.
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