Clubbing of income

791 views 4 replies

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..

 

Thanks

 

Replies (4)

a) Treatment of Gift of50 lacs by Mr. A to Mrs A = not taxable anywhere

Not taxable as gifts to relatives are exempt

 

b) Clubbing of Int income (Q4) of1.75 lacs...??.

Clubbing provisions are applicable as soon as the income accrues and therefore if Q4 has begun and intrest income is so accrued, clubbing provisions shall apply

 

c) Clubbing of Int income (Q1, 2 & 3) of5.25 lacs...?? which inturn reinvested 

Interest income will be clubbed

 

i) Clubbing of Business Income of35430

INCOME ARISING OUT OF CLUBBED INCOME ON TRANSFERED ASSET IS NOT TO BE CLUBBED

Therefore NO

 

reinvested in FD at end of quarter

Interest on reinvested amount of interest should not be clubbed (same reason as above)

 

Had Mr.A given a 0% loan to MRS. A , clubbing provisions would not be effective

 

Had Mr.A given a 0% loan to MRS. A , clubbing provisions would not be effective

 

hi Z pls explain this....

what we do practically....!

Had Mr.A given a 0% loan to MRS. A , clubbing provisions would not be effective

 

hi Z pls explain this....

what we do practically....!

Because provisions of clubbing are effective when the transfer is revocable

As per sec 62 all income arising from such transfer (IRREVOCABLE) shall be clubbed in the hands of the TRANSFEREE and not in the hands of transferor

 

Clubbing provisions (sec 64 family like 64(1)(ii) ,64(1)(iv) etc) have overriding effect on sec 62 

But giving loan is not a tranfer of asset w/o transfer of income 

Theres also a case law Which am not able to cite now but am certain there definitely is a case law 

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