Income on gift to spouse by book entry

Dear All,

Mr. X is having MIS and Kisan vikas patra in his name. To divert  Interest income, he Gifted  these MIS & KVP to his wife by book entry without getting the actual endorsement through the Post Office. Can  he diverts his income like this.

CA. A. K. Aggarwal

Replies (2)
Please refer section 64(1)(iv). Income from assets trfd to spouse otherwise than for adequate consdiration will be added to the income of the transferor.
In my opinion, tansfering an asset merely by book entry without actually getting it tranfered legally doesn't amt. to valid transfer at all. hence, to the best of my knowledge, interest income can't be transfered this way.

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