4. Clubbing Of Income Of Spouse, Minor Child Etc.

Question 1

Clubbing

Answer 1

Section 60

Transfer of income without transfer of asset - this kind of income will be included in the income of transferor only, whether or not transfer is revocable or irrevocable

Question 2

Income arising from revocable transfer

Answer 2

Section 61

It contains provision for retransfer property to transferor- the income arising to get transferee shall be clubbed in income of transferor

Question 3

Section 62

Answer 3

Transfer is irrevocable

Question 4

Clubbing of remuneration paid to spouse clubbing is to be done if

Answer 4

64(1)(ii)

• tax payer is individual
• he/she with a relative has substantial interest in a concern

[Company >= 20% voting rights
Other >= 20% profit]

• spouse of T.P is employed in such concern
• spouse has no technical/ professional knowledge of such employment

Question 5

Notes- clubbing with spouse

Answer 5

Where both husband & wife has substantial interest & both are getting remuneration without knowledge from same concern

Then, income will be clubbed in total Income of husband or wife where total Income (without salary) is higher

Once included- then for subsequent yr also in same person

Question 6

Income arising to spouse other than from H.P Transferred without adequate consideration

Answer 6

64(1)(iv)

-t.p is individual
- transfered asset (not H.P) to spouse w/o consideration
- not in agreement to live apart
- transfer directly/ indirectly

Question 7

Notes 64(1)(iv)

Answer 7

• for H.P -> sec 27 -> deemed owner (same prov)
• clubbing is still applicable if the money is gifted & spouse invest in asset
• capital gain from asset is also to be clubbed
• if transferred asset are invested in business of transferee

Income from such business will be clubbed as under

Profit of business x amt invested out of trf
of asset on the 1st day
of P.Y.
________________________
Total investment of
business on 1st day

Question 8

Income arising from son’s wife from asset (including H.P) transferred w/o adequate consideration by Father-in-law/ mother-in-law

Answer 8

64(1)(vi)

-tax payer is individual
- trf of asset directly/indirectly w/o adequate consideration to son’s wife

• then it is to be clubbed
• for trf asset if invested in her business then

Profit x amt as on 1st day
__________________
Total investment as on 1st day

Question 9

Clubbing of minor’s income

Answer 9

• every minor income apart from 3 will be clubbed in parent whose total income (w/o this income) is greater.
• once it is clubbed then in subsequent year also it will be clubbed in same parent
• income of minor married daughter will also be clubbed

Question 10

The following 3 income of minor will not be clubbed

Answer 10

1. Income is on a/c of any activity of his skill, talent or specified knowledge
2. Income is on a/c of his manual work
3. Minor child is suffering for disability mentioned in section 80U

Question 11

Exemption for minor clubbing

Answer 11

Section 10(32)

Exemption of ₹1500 p.a. per child

Question 12

Conversion of self acquired property into property of HUF

Answer 12

Before partition of HUF

• If property transferred directly/ indirectly to HUF w/o adequate consideration
• income from such property to be clubbed to transferor i.e. in hands of member (not to HUF)

After partition

• when such converted property is divided in total or partial portion of spouse
• income to spouse to be clubbed

Question 13

Common notes

Answer 13

u/s 64 Income includes loss

Clubbing
u/s 64 applicable to: spouse, minor child,
son’s wife & HUF
u/s 60 & 61 applicable to: all

-A creation of Income i.e. Income from income is not to be clubbed