Gift & clubbing of income

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This query is : Resolved

Kamal A. Jivani (Querist)

17 November 2014 Husband gifts Rs. 10-10 lakhs to his wife & major son through cheque by preparing the "Gift Deed". Wife & son invested the gift amount in the "Fixed Deposit" & "Traded in Share market". Now the question is
1) Whether clubbing of income(i.e. interest on FD & STCG) is applicable in both cases?
2) If yes, how can we restrict clubbing of Income ? please show the ways
3) If in the gift deed, husband clearly writes that the income generates from the gift is of "Donee" only and clubbing will be done. So is it possible?

Thanks in advance for the solutions.

Amol S Joglekar

Amol S Joglekar (Expert)

17 November 2014 It will attract clubbing provisions.
The SPV could be, let the son start a business for which Father can advance interest free LOAN.

Kamal A. Jivani

Kamal A. Jivani (Querist)

19 November 2014 But as per sec. 61 if husband gifts for the whole lifetime and will not have any right on the gift amount, then also clubbing of interest is applicable?

Amol S Joglekar

Amol S Joglekar (Expert)

20 November 2014 Revocable transfer of assets.
61. All income arising to any person by virtue of a revocable transfer48 of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.

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