Income Tax Treatement

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I have a case where the individual is abroad and has sent some money to his wife in India, She arranges some more money from bank through loan and also uses the money received from her mother to buy a property. Now if the property is let out for rent and earns say 7.00 Lacs per annum. Will clubbing provisions apply & if yes what will be the taxable income in the hands of the individual

Replies (21)

I wuld like to Know  this answer from experts in the Forum  or any one who knows the answer to the query posted 

in proportionate ratio of the investment the amount would get clubbed, but beforehand the interest portion should be decucted from the rental income, if interest income is exceeding the loan from bank and mother in law, then the balance only should get clubbed.

Originally posted by : U S Sharma

in proportionate ratio of the investment the amount would get clubbed, but beforehand the interest portion should be decucted from the rental income, if interest income is exceeding the loan from bank and mother in law, then the balance only should get clubbed.

My view is clubbing provision not applicable  for Non Residents .so wife is taxed on the total income 

waiting for experts view on this

Thanks for all the replies..

Meanwhile, i was also researching on this area.

So what i could find out is that income from the gift would be taxable, hence income from property located in india will be taxable as indian income in the hands of the NRI also.

Mr. Sivaram i dont think the clubbing provisions have exemption for non residents.

however there are cases where the court has decided that if the property is bought out pin money then it shall not be taxable.

Wonderful praveen but  i am of the view clubbing provisions are not applicable to Non residents can u attach any  clarifications to this reply please from the act 

i also think that clubbing provision will not attract...

NO CLUBBING PROVISION WILL ATTRACT

As per Section 64 1 (iv) "Subject to the provisions of clause (i) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart;"

See nowhere in the section it refers to residential status.

moreover as per me whatever you receive from your spouse is gift. Income from gift is clubbed in hands of the person who gifts na. Hence, Clubbing provisions are bound to apply.

One of the reply of expert is as follows:
 


Aditya Maheshwari
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( Expert )
23 June 2011


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If the amount received from husband is treated as loan and to be repaid back then clubbing provisions will not apply.

One more strong article supporting my views is at the following addr

https://www.moneycontrol.com/news/nri-experts/is-there-taxtransferincome-to-non-earning-spouse_396229.html

Thanks Mr Praveen for enlightening our knowledge on this

in my openion , clubbing provision will not apply, if husband gives money as loan to his wife , not as gift,

and gift from relative (mother) is not taxable as per section 56(2) , hence there sholud be no cluubing


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