Dear Members,
If proprietor receives gift of Rs.2.5lacs from father or spouse and invest as capital in business than shall profit earned from proprietory concern be clubbed in income of father or spouse from whom gift is received?
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Replies (1)
Yes clubbing provisions will apply if gift is received from spouse. The profit derived from properietorship business will be clubbed proportionately in the hands of spouse if some capital is already invested in business in ratio of gifted amount bears to the total capital of business.
Therefore it is better to obtain gift from father as it will have no gift tax implication u/s 56 and no clubbing provisions will be applicable on profits earned from business.
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