Clubbing of income

Others 670 views 4 replies

Arvind Sharma

ACA

1432 Points Joined May 2009

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)

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

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