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    Clubbing of Income

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    Deepak Kumar

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    4oarzor9 Cubbing of income under Income Tax Act, 1961 -Section 60 to 64 » Income Tx hpitaxguruinistgorincome-ad) » Atichs (itositagurintypelriles)» ‘untypetestres) come under Income Tax Act, 1961 Seetion 60 to 64 (https:/taxguru.infincome-tax/eubbing- section-64.htmb) sitaxgurivautoradrin) EESEZIY es: sendy com) psvaxgurivcategoryincome-ta) - Ales (tps taxgwy inypelarties}- Featured (nto axe Lintap-adrinlpost php?post=€50608acton=ed!) 25 Jil 2018 (hips:iaxgunsn/2018I07/25) © 82, (htps axguinincome-taxtbbing-ncome-ncome-taxcat-96'-secton.60-ecton64 Nmpeat ieneraly an sssessee is taxed in respect of his own income, But sometines in some exception tod and the asessee may be taxed in respect of income which gay belongs to somebody es. Es « ther ax Habit by ranefering their asses in favour ofthe farily members or by arranging tei idence falls on oer, whereas benef of income 1s derved by them, So to counteract such fons have been incorporated in sections 60 o 64 of the Income Tax Act Hence, a parson i abl tc «belonging o others on fle of cotan condone rs incomes inthe income ofthe assessee is called Clubbing of Income (htpsRaxgur.nincometa et 1961. html) and the income which is $9 included is called Deomed income. Its a per the provisions containe ve Tax Act. Objective -Main Objectives are as follows: + Circumstances when income of some other person i included inthe income of Assossee + Provisions when these sectons wil be applicable + Under what head and in whose income til be included, Cases of Clubbing of Income Page Contents Gases of Clubbing of income [A Clubbing of Income for Transfer Of Income Without Transfer OF Asse (Sec, 60) . Clubbing of income for Revocable Transfer Of Assets (See 61) CC. Clubbing of Income Of Spouse SEC. 64(1 (i) . Clubbing f Income From Assets Transferred To Son's Wife (SEC. 64 (1) (Vb . Clubbing of Income From Assets Transferred To A Person For The Benefit Of Spouse [SEC. 64(1) (VI F Clubbing af Income From Assels Transferred Te A Person For The Benefit Of Son,S Wife (Sec. 64 (1) (Vil 6. Clubbing of Income OF Minor Child (SEC. 64 (1A) H. Clubbing of Income OF HUF(SEC. 64 (2) ‘Other Points for Cuobing of Income under Income Tax Act, 1961 Can negative income be clubbed? Head of income under which an income belonging to somebody else would be clubbed? Under the folowing circumstances, in the pages to follow, 8 income of other parson is inluded inthe income ofthe assessee. We wil be discussing each ane of them A. Clubbing of Income (https://taxguru.in/income-tax/clubbing-income-related-provisions.html) for Transfer Of Income Without Transfer Of Asset (Sec. 60) Section 60 applicable if the following condtions are satisieg + The taxpayer owns an asset + The ownership of asset is nol transferred by him, + The income from the assets transferred to any person under a setlement, or agreement Ifthe above conditions ae saisted, the income from the assel would be taxable in the hands ofthe transferor INustration 10.1: Amitabh Bachan owns Debentures worth Rs 1,000,000 of ABC Lid, (annual Interest being Rs. 100,000, On Apt 1, 2018 he ‘ransfers interest income to Shahrukh Khan, his ond without transferring the ewnership ofthese debentures. Alfough during 2018-19, in ‘Rs, 100,000 s ecolved by Shahvukhy Khan, It taxable in the hands of Amitabh Bachan as per Section 60, hitps:ftaxguruinfincome:-taxclubbing-income-income-tax-act-1961-section-60-section-64.html 19 4oarzor9 Cubbing of income under Income Tax Act, 1961 -Secton 60 to 64 htm) for Revocable Transfer Of Assets (Sec 61) fer moans the transferor of asset assumes a right to re-acqure asset or income from such an asse 2, during ts Iii of trans! Italso includes a transfer which gas a ight to re-assume power ltetime of transferee, andltons are satisfied secton 61 will become applicable \ranstered under a “revocable transl’ ‘efor this puposs includes any setlement, or agreement 2 from such an assets taxable in the hands of 1 transferor and not the transferee (owner, ction: 64 income arses to any person by vue of transfer by way of trust which is nat revocable during the Ii any other transfer which isnot revocable during the life time ofthe transferee. income arses to any person by virue of transfer made before 01.04.1961, which isnot revocable 3 of Income Of Spouse SEC. 64/1) (ii) ‘omes ofthe spouse of an incviaual shal be included inthe total income ofthe individual: on from A Concern In Which Spouse Has Substantial Intarest [Sec 64 (1) (i) 12m could be any form af business o professional concem, lcould be a soe propritr,partership, 1est — An individual i doomed to have substantal intrest, ithe /she (individually or along with his reerewe=rx ‘ying nat less than 20 per cent votng power inthe case of a compary or is enliled ta not less than 20 percen ‘ne case ot @ concer other than a company at any ime during the previous year. Ifthe folowing cantons are fufiled this section becomes applcable + It spouse ofan indvidual gots any salary, commission, fos ele (remuneration) fom a concern + The individual has a substantial interest n such a concer + The remuneration paid tothe spouse ls nat due to technical or professional knowledge ofthe spouse. + Then such salary, commission, fees, ete shall be considered as income ofthe individual and not ofthe spouse, tration X has a substantial interest in ALi, and Mrs. Xs employed by A Lc. without any technical or professional qualiication to justify the remuneration. In his ease, salary income of Mrs X shal be taxable in the hands of X ‘When both husband and wife have substantial interest ‘here both te husband and wife have a substantial interest in a concern and both are in receipt ofthe remuneration from such concern both the remunerations wil be included i the total income of husband or wife whose total income, excluding such remuneration, i greater (i) income From Assets Transferred To Spouse [SEC. 64(1)(W}] Income from assets tanslered 1 spouse becomes taxable under provisions of section 64 (1) (w) as por folowing conditions: + The taxpayer is an incvicual + Holahe has transfered (srectvindirect) an asset (other than a house property) The asset i trans + The asset is ransfrred without adequate consideration. Moreover there ls no agreement to lve apart, red ta hither spouse If the above condions ascot 1 sabsfed, any incama from such asset shall be deemed to ba the income ofthe taxnayer who has transferred the Iustration 10.3 ~ x transfers S00 debentures of included in the income of X 1 to his wife without adequate consideration. Interest income on these debentures will be ‘When Section 64) (v) Is not applicable On this bass of the aforesaid discussion and judicial pronouncements, section 64s not applicable inthe following cases: + tfassots ae transfered before mariage + Ifassets are transferred for adequate consideration. + ttassots ae transfered in connection with an agreement ove apart + Iron the date of accrual of income, transferee s not spouse of te transferor. + If propery is acquired by tho spouse out of pin meney (2. an allowance given to the wife by her husband for hor dress and usual household expenses), In the aforesaid fve cases, income arising from the transfered asset cannot be chibbed in 1 hands of te transferor. D. Clubbing of Income From Assets Transferred To Son’s Wife [SEC. 64 (1) (VD)] Income from assets transfered to son wife attract the provisions of section 64 (1) (vl). as per condtons below- hitps:ftaxguruinfincome:-taxclubbing-income-income-tax-act-1961-section-60-section-64.Html 29 4oarzor9 Cubbing of income under Income Tax Act, 1961 -Section 60 to 64 + The taxpayer is an incvicul + Holehe has transferred (srectvingiecly) an aseet ater May 31, 1973, The assets tranterred to son's wie s transferred without adequate consideration, ch indiviguals, the income from the assets inched inthe income ofthe taxpayer who has transfer yof Income From Assets Transferred To A Person For The Benefit Of fs transferecto @ person forthe beneftof spouse attract the provisions of section 64 (1) (vi) on du ‘er isan incvicual. 5 translerred(srectyindrectly) an asset to person oF an association of persons. Asset is {sferred) of spouse. vr of asso is without adequato consideration. ‘alvduals Income from such an assets taxable inthe hands ofthe taxoayer who has wansferrod the of Income From Assets Transferred To A Person For The Benefit Of fs transferee to person forthe benefit of sons wife attrac the provisions of section 64 (1) (vi) on + ‘sis an incvicual + transtecred (dretlyingirecly) an asset after May 91, 1973, Is vansferred (drectyindrecty) to any person or an assocaton of persons. The asst Is transferred (mmmenitedeferred) of sons wife. + The astot is transferred without adequate consideration In-case of such individual, the income from the asset is included in the income ofthe person who has transtorred the asset G. Clubbing of Income Of Minor Child (SEC. 64 (1A) (https://taxguru.in/income-tax/clubbing- provisions-income-minor.html) {All income which arses of accrues tothe minor child shall be clubbed inthe income of his parent (See, 84(1A), whose total income (excluding Minors income) is greater. However, in case parnis are separated, the income of minor will be included in the income of that parent who ‘maintains the minor child in the relevant previous year. Exemption to parent [Sec 10(32}] ‘An individual shall be ented lo exemption of Rs. 1,500 per annum (p.a.) in respect of each minor child if the income of such minor as included under section 64 (A) exceeds that amount, However ithe income of any minor child is less than Rs. 1,500 p.a. te aforesaid exemption shall be restricted tothe income sa included in the foal income ofthe individual ‘When Section 84(1A) 5 not applicable In case of income of minor child rom folowing sources, the income of minor cid isnot lubed wth the income of his parent, + Income of minor cil on account af any manual work. + Income of minor child on account of any act involving application of his ski, talent or specialized knowledge and experience. + Income of minor chil (rom al sources) suferng fom ary cisabilty specified wis 80U ntps:taxqur inlincoms taxllubbing provisions incom H. Clubbing of Income Of HUF{SEC. 64 (2)} hore, in the case ofan individual being a member ofa Hindu undvided family, at any ime afer the 31st day of December, 1969, has converted his sol-acquird property into propery belonging fo the family through the act ofimoressing such separate proparty with the charactor of property belonging tothe family or throwing it into the common stock ofthe family or been transferred by the individual, directly or indirectly, to the family ‘otherwise than for adoquate consideration (the property sa converted or transferred boing hereinafter referred to as the corwerted property), the income arising from such convertedtransfared propery shall be dealt wih inthe following manner: 1. The entre income trom converteditransferted property shall be taxable inthe hands of tho indvidal (ransfero:) 2. If the convertedtvansfered property is subsequently partioned amongst the members of the family, the income derived fom such converteiransfered property as is received by the spouse ofthe ransfror willbe taxable in the hands ofthe transferor Other Points for Clubbing of Income under Income Tax Act, 1961 hitps:ftaxguruinfincome:-taxclubbing-income-income-tax-act-1961-section-60-section-64.Ntml 39 4oarzor9 ‘Clubbing of Income under Income Tax Act, 1951 -Section 60 to 64 Can negative income be clubbed? 1 clubbing provisions are applicable and income trom such a source is negative it wl sil be clubbed in the income of ‘ome under which an income belonging to somebody else would be clut ‘Income taxable under the head under which would have been taxable Fits the income of he 2X gts Mrs. X Re 2 lakhs fom which she slats business. Now as per citing provisions wht “taxable in the hands of MX, Since isan income taxable under the head Profs & gas of Bs able under the some head and income wil be calculated as isthe busines of MX retin aninddual's taxed in respect of others income, The Income legally belongs lo someboc ime other person in some special drcunstances. These provisions are contained in sectons 60 to 64 contains provisions when income fom an asset is ransfred without ansferng the aset ort se. In bo the stuatons income fom such asses tested as income of the transferor. received bythe spouse from @ concer In which ndviual has subtotal intrstis arabe nthe | sso ranstoed to spouse wil contnue tobe taxable inthe hands of forme. neame fom any ass able in he bands of transferor. inlay income from any asset tanetered to sons wife o forthe +n the hands of anstoror, The otter persons income is taxable under the head under which wot 2 assesses himeet. ih Amendments) sndana Bansal sweaty AesReguninageecto 2 mm set na ‘More Under Income Tax (https://taxguru.in/eategory/income-tax/) ay Us. 2711. uses on nce disclosed durng suvey (hips taxguinncometaxipenaty-6.271"e4usttadncome-ssclosad.curng suvoy!in) Income Tox bens of buying sroperty oly (ps Rexgusnncomeaxncome-a-benelts- uy groper.) How oa caubte taxon Shaves ant Mutual Funds (Mtstaguruinincome-tanaaniy-aluste ta sherri unset) ‘Ton Enharced Componsation fr Compulsory Acquistion of Agata Lang (hpsitaxgunncomeatax-orhancad-ampensan compu: aoquetoragriuturatiand ne Peay Ul 271(¢ nat sustaable nace not have space chalge (pe itaguuNincme-tasperatyis27teaustanablenotoespectctarge.Nn!) « Previous Article (nips: /taxguruinvincame-taxrebate-secion-872-income-ax-act-1961 him!) Next Article »(htip:maxguru.inincome-taxlcaleuate-iteres-234a-254b-204c-rlurn-due-date-coneequenceslte-ng.himl) 14 Comments Dnarabie Share sys [tates Fed depost amount 2 est his maj sn, whol oa txpayer. Whee intrest income wl be cubed in telcos ofthe? ity, shee any ease under whch grovson af cishing wil not be aplcble m above case ? -nips:mRaxgur ievincome-taxiluboingincome-income-tax-act-961-section-60-secton-64 hil 4azor9 ‘Clubbing of Income under Income Tax Act, 1961 -Section 60 to 64 tf January 6, 2019 at 2:3 pm (ostaguinincama-[ Rely VtconeinvehBorgheaneircanetaracB6 Tansee Shanon ‘axlubbino-noomenoame ax act-496%-scton-60-secton4 mitoommont2096818) teapcan lib his income an can eli chapter A DEDUCTIONS wndor my incr? 2o1aat7a0gm Fst er re orcas 6 cr Oana ‘comeing income ncome-at-ac-196 -secto-80-sozton64 nmlfconent-2035060) vs \eincome rom hous which is myname) in TR 2015-18 FY -Can I get the benifit f hous income under HUF Wyma neue isnot an ent for he some period, han nome wil be includ in my income errata of 8 age 24608 pm (ips:axguuinincome: ‘uty sone ang neotenic 6c fant ‘meincome-ty-t-1961con-0-eelon-64hlicommeni-1957428) vs vary good post. evaryeng {8 Aor 24, 20173438 pm tpstaxquruinincoe- ‘axlibing-ncomeincome ox sc-496%-selon-60-cecton.4 Mntcommen-855500) Varun Shut soy: [Aether gts Fined dpost amount 2 eh thls major sn, whol os taxpayer. Whee intrest Income wil be cube thencume father? ify, shee any ease under when srovsion af cishng wilt be apical above case ? tiiAor 16, 20173724 pm (nipstaxguuinincome- taxtbbing-ncomeoome-axsc/-4061-sston-6-eecon-4 imimomment-1954570) Sukumaran says: ‘Myson has invested Re Sas nth annuity scone of LIC. The payin the name of my wile ad he mony inierea being ered her account ‘Whether th itretincome Ist be clied wit my sons income? (rtps:inaxquu.mincomesaxieusng:ncome-ncemeio¢-sc-198%-sectan-60-seclon 84 miteonment-853098) Fahad sys: ‘As par income tax at clubbing proviso s apleabe on vansfro spouse o son's Wile & income of minor cis ts youcan git yur son an willnot be enbed in your name (8 Joniary 10,2019 a 1:07 am expaioed so snp, Rat son arene reo -er Sb aa ne sms t SSS) eter ih ihrer 1660-9 Hn BASTION) Ret cui rg netomat ocr ec ean SCtaterd) Ret von nln ane tent -ecr anct- nTopcnsBESeRbpond) (ttpsnaxgunnincome-axicsingncome-neame x ac-98%-seton 60sec. 88 ineommer-2037388) D0 Doge says: Ianto gt Re, 8.0 at ar year to my aught wo a 18+ and sdent t preset Income aie out of is Re 600 lk wl be table inte hands of my laughter orn hands, Pee clay, 00. aga -nips:mRaxgur ievincome-taxiluboingncome-income-tax-act-961-section-60-secton-64 hil 59 4azor9 cut being of Income urdar Income Tax Act, 1961 Section 60 to 64 tMaugust 26,2016 a 1:22 am (htesnaxguinincame- [Reo ramets conser GteedertDoedert taxlubbino-noomenoome-exact-406!-scton-60-eecon 4 moomment-10472) ‘enn sums of money ois wf, who hs eed his money pat Banco the cost of purchase of fs woh hele be considered afl cuer ots propery and apply ‘NI annual vale for is a ncome rom house pop roperyis lied inthe hands of the asband le 4 (KW) 2015 440 pm rly my equetie oyu, alee gv your 5:17 pm tps tang inincome rmeincomestny-s1961econ-0-ech and to vate some amount ety 85 {Aor 15, 2085 2 18:41 am fpsitaxguusnincome- Fut oscil ig hoon temic 6 or SO ant focame taxiing rcome-ncome-o-9¢-961-sector-60-erton.4 icoment-862912) valuabe thoughts on othr aspects fhe income ax Fat sone ang neotenic fant ton-64hmltconmeni-1741605), ok) my hme maker wie’ name. Wa Be my oe ably sama. My wo stoi rere rconetiat6 cr 60sec 6 Hn OSI) tsxtcbbing-noomesnoome-ex-ect-4061-secton-60-eechon-4 mitomment-1620590) ‘Rae dan says: ‘Tanks. ele a formy ss, tocar 20, 2014 22:25 pm keri ihrer 1660-3 MNT THT) {rips naxguinincome-txteubsingrcome income at ac-1961-socton-60s6rton 4 hli#conmant-1278887) sum ouPTa says ‘hanks fr explain in ayo snp langsago fo unerstand mo or eveyone ‘aka suit tt august 4, 20143 40 om (ntp:taxgurnincome- tein nore 16 e604 5 MNT BASLONp ‘axlbbing-ncome nomex ac-496"-sston 60-secbon-4hifommont-O88640) Pranab Bane sys: ‘Tanks fr this most valuable post {A Docombor 26, 2011 st740 pm (rps targus inincame-autibingrcome-ncome-et-ac-1961-scton-60-0cbon 4 lcommen-460911) Leave a Comment ‘Your email address wil na be pblihed, Reqd Sed are marked * a Nene -nips:Raxgur ievincome-taxiluboingincome-income-tax-act-961-section-60-secton-64 hil 69 4oarzor9 ‘Clubbing of Income under Income Tax Act, 1951 -Section 60 to 64 Enel es AES CU ial Pera ees | Staten ross 1. 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