Under Section 64 (1) (a) of the IT Act, if the father-in-law or mother-in-law makes any gift to his or her daughter-in-law, i.e., their son’s wife, on or after 1 June 1973, the income arising to the daughter-in-law in respect of the gifts so made would be liable to be included in the total income of the father-in-law or the mother-in-law making the gift.
However, where such a daughter-in-law receives a gift not from her father-in-law or mother-in-law or her husband but from her father or mother or uncle or aunt or uncle-in-law, etc. then the income arising to such daughter-in-law in respect of such a gift would be liable to be assessed as the income of the daughter-in-law separately. |
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Such income would not be included in the total income of the father-in-law or the mother-in-law or the husband of such a lady. Besides, if the daughter-in-law makes an investment of such gifted amount, the income arising to her out of such investment would also be liable to be assessed separately.
Similarly, if she were to join a partnership firm as a partner with the help of such gifted money, the interest arising to her would be assessable to tax in her separate assessment. Such interest or salary as a working partner would not be liable to be included in the income of her husband or father-in-law or mother-in-law or any other relative. If she is a partner of any firm carrying on any business, her husband could also be a partner in the same firm.
Now, from assessment year 1993-94 her share income from the firm would not be clubbed with the income of the husband. This is illustrated in the following example.
Illustration:
Mr. A has a major son named Mr. B, who gets married on 18.1.2012. Mrs. B receives a sum of `4,00,000 as gifts from her father, mother and other relatives, on the occasion of her marriage. Mrs. B joins a partnership firm along with C, D and E who are outsiders. Her interest from the said firm in respect of the accounting year ended on 31.3.2012 relevant to the assessment year 2012-2013 is ` 44,000. The income of Mr. A from his separate business is `43,000 while the income of Mr. B from his own separate business is, ` 72,000. In this case Mrs. B would be liable to be assessed separately on interest from the partnership firm amounting to `44,000 and tax payable would be NIL. This sum of `44,000 arising to Mrs. B would not be liable to be included along with the sum of 43,000 being the income of her father-in-law Mr. A or with ` 72,000 the income of her husband, Mr. B.
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