Clubbing of income

Arvind Sharma (ACA) (1432 Points)

06 February 2012  

Dear All..,


I have a querry on clubbing of Income. Please give me reply with appropriate reason/sec/case law...


Mr. A gives Rs. 50 lacs to Mrs. A on 01/04/2011, which in turn, Mrs. invested in FD at int @ 15% p.a., intrest realising quarterly (i.e. effective rate 3.50%).

Mrs. A, out of interest realised in Q1, 2 & 3 (i.e. Interest upto Dec 2011, total Rs. 5.25 lacs):-

a) started business and generate taxable profit of Rs. 35430/-

b) reinvested in FD at end of quarter., (ie int of Q1 invested in 01-07-2011, Q2, 01-10-2011 & Q3, 01-01-2012) @ interest @ 15% p.a.,  intrest realising quarterly (i.e. effective rate 3.50%) = total interest earned = Rs. 36750/-


My question is as below:-

a) Treatment of Gift of Rs. 50 lacs by Mr. A to Mrs A = not taxable anywhere

b) Clubbing of Int income (Q4) of Rs. 1.75 lacs...??

c) Clubbing of Int income (Q1, 2 & 3) of Rs. 5.25 lacs...?? which inturn reinvested and

i) Clubbing of Business Income of Rs. 35430/- or

ii) Clubbing of Int income of Rs. 36750


Please reply soon..