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Clubing of Income

STRUCTURE

6.1. Transfer of Income where there is no Transfer of Assets

6.2. Revocable Transfer of Assets

6.3. Income of Individual to include Income of Spouse, Minor Child etc

6.1.  [ Sec. 60] : TRANSFER OF INCOME WHERE THERE IS NO TRANSFER OF ASSETS

U/s Sec60, where the assessee transfers to another person some income but without the transfer of assets producing that income, such an income shall not be the income of the transferee but it shall be chargeable to income tax as the income of the transferor and shall be included in his gross total income.

Such a transfer of income may be revocable or irrevocable and whether effected before or after the commencement of this Act.

6.2.      REVOCABLE TRANSFER OF ASSETS [Sec. 61]

All income by virtue of a “revocable transfer” of assets arising to any person shall be chargeable to income-tax in the hands of the transferor and shall be included in his total income. The transferor includes any settlement, trust, agreement or arrangement.

6.3       INCOME OF INDIVIDUAL TO INCLUDE INCOME OF SPOUSE, MINOR CHILD, ETC. [ Sec. 64]

Apparently the following incomes belong to persons other than the assessee but these are included in the assessee’s gross total income under Sec.64. These incomes are :

(i)        [Sec.64(1)(ii)] : Any Salary, Commission, Fee or any other Remuneration received by Spouse :

Any income accrued to spouse by way of salary, commission, fee or any other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest, shall be considered to be the income of such individual.

Any income arising to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of his or her technical or professional knowledge and experience, it shall not be included with the income of Individual.


(ii)        [ Sec. 64 (1)(iv)] : Income of Spouse from Assets transferred

In computing the total income of any individual, there shall be included all such income as arises directly or indirectly— 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 ;
If the assets are purchased from the income of the transferred assets any income to a spouse or from such assets shall not be included in the total income the transferor.

(iii)       [Sec.64(1)(vi) ] : Income from Assets transferred to son’s wife without adequate consideration

Any income accruing from asset which is transferred after 1-6-1973 to daughter-in-law without adequate consideration shall be considered to be the income of transferor w.e.f. assessment year 1976-77.

(iv)       [ Sec. 64(1)(vii)] : When an individual is assessable in respect of income from assets transferable to a person for the benefit of Spouse

The provisions of section 64(1)(vii) are given below with conditions ---

1.         The taxpayer is an individual and had transferred an assets which may be direct or indirect.
2.         The asset is transferred to a person or an association of person.
3.         It is transferred for the immediate or deferred benefit of his/her spouse.
4.         The transfer is without adequate consideration.

(iv)   [ Sec. 64(1)(viii)] :  When an individual is assessable in respect of income from assets transferable to a person for the benefit of Son’s Wife

The provisions of section 64(1)(vii) are given below with conditions ---

1.         The taxpayer is an individual and had transferred an assets after May 31, 1973 and  which may be direct or indirect.
2.         The asset is transferred to a person or an association of person.
3.         It is transferred for the immediate or deferred benefit of his/her Son’s Wife.
4.         The transfer is without adequate consideration.

(v)       [Sec.64(1A)] : When an Individual is assessable in respect of income of his minor child
In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child on account of any—

(a)  manual work done by him ; or

(b)  activity involving application of his skill, talent or specialized know-ledge and experience.

Clubbing provisions of section are not applicable--- when a minor child suffering from any disability of the nature specified in section 80U.

 
 
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