Taxation

The clubbing provisions will apply if Mrs. Z invests the amount gifted on the 1st day of P.Y. The income to be clubbed with Mr. Z= (Investment out of fund gifted on the 1st day of P.Y) x (Business income)/ (Total investment on the 1st day of P.Y.) = 7,50,000 x 20,00,000/30,00,000 = 5,00,000. However no clubbing shall be done in current year if Mrs. Z does not invest the gifted amount on the 1st day of P.Y. Thus TI of Mr. Z = 5,00,000 Mrs. Z= 2,50,000