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Wont income from loan come under Clubbing of income u/s 61

Ujjwal Swami (24 Points)

25 October 2021  
Section 61 of Income tax act says any income earned from revocable transfer of asset made by the assessee to other person will be clubbed in assessee's hand.
My question is, as per above line then if even loan given by assessee to a person (say a business) and that other person earns income from such loan then, that income earned from such loan by the business should be clubbed in hands of the lender. Why is the wording like that? if the section is true then why do businesses who borrow pay tax and why their income earned from that loan be clubbed in income of lender and they be paying the tax? This is my query.

 1 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)   (2913 Points)
Replied 25 October 2021

By virtue of section 61, if an asset is transferred under a “revocable transfer”, income from such asset is taxable in the hands of the transferor. The transfer for this purpose includes any settlement, trust, covenant, agreement or arrangement.

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