reshma.k roll no.40 (tax)

8/7/2019 RESHMA.K ROLL NO.40 (TAX)

1/31

TOPIC:-

CLUBBING OF INCOMES AND AGGREGATION OF INCOMES

BYRESHMA.K


2/31

CLUBBING OF INCOMES

MEANING-Income of other

persons shall be included in the assessestotal income. Such inclusion of income of other person in the income of theassessee is called clubbing of income .


3/31

INCOME OF OTHER PERSONS INCLUDED INTHE ASSESSES TOTAL INCOME

1 . Transfer of income without transfer of assets.(sec.60)2. Revocable transfer of assets.(sec.6 1 )3. Income of spouse.

a) income of the spouse by way of salary,commission, fees or any other form of remuneration from a concern in which suchindividual has a substantial interest.(sec.64( 1 )(ii))b) if an asset (excluding house property) is

transferred by an individual to his or her spouse,directly or indirectly, neither for adequateconsideration nor in connection with anagreement to live part, the income from suchasset to the spouse, will be included in theincome of the transferor.(sec.64( 1 )(iv))


4/31

4. Income of daughter -in law(sec.64( 1 )(iv))5. Transfer of assets to other persons or

association of persons for the benefit of spouse.(sec.64( 1 )(vii))6. Income from assets transferred to a person or

association of persons for the benefit of his son swife.(sec.64( 1 )(viii))

7. Income from business(sec.64( 1 ))8. Income of a minor child.(sec.64( 1 A))9. Transfer of separate individual property or self

acquired property to HUF of which he is a

member or conversion of property.(sec.64(2)(a)and(b)).1 0. Benami transactions.


5/31

1. TRANSFER OF INCOME WITHOUT TRANSFER OF

ASSETS.(SEC.60)

If a person transfers toanother person his income from an assetwithout transferring the ownership of theasset, the income from such asset shall bedeemed to be the income of the transferor and shall be included in his total income.


6/31

Example:-

Mr. A owns a house property from whichhe earns a rental income of RS.50000-

now suppose he transfers such rentalincome to his wife either by directing thetenant to pay the rent directly to her or byotherwise. In this case although rent willbe received by his wife yet it shall beincluded in the income of Mr. A (that istransferor of income)


7/31

2 .REVOCABLE TRANSFER OF

ASSETS.(SEC.61) All incomes arising to anyperson by virtue of a revocable transfer of assets shall be chargeable to income tax asthe income of the transferor and shall beincluded in his total income.

A transfer shall be deemed to be revocableif:

1 . It contains any provision for the re transfer

directly or in directly of the whole or any part of the income or assets to the transferor OR2. If in any way gives the transferor a right to re

assume power directly or indirectly over thewhole or any part of income or assets.


8/31

Example-

Mr. A transfershouse property to Mr. B which shall not berevoked during the life time of Mr. B Thusany income from transferred houseproperty shall be treated as income of Mr.B (transferee) during his life time.


9/31

3 .INCOME OF SPOUSE .a) income of the spouse by way of salary,commission, fees or any other form of

remuneration from a concern in whichsuch individual has a substantial

interest.(sec.64( 1 )(ii))Exception- if the payment of the above type

of remuneration are purely due to thetechnical or professional qualification of the spouse, the remuneration paid to thespouse shall not be clubbed with theincome of the individual.


10/31

SUBSTANTIAL INTERESTIf an individual has got a substantial interest in any

company or concern then any income accruingto the spouse of such individual from thatconcern or company shall be included in thetotal income of the individual havingsubstantial interest in such concern. The

income to the spouse may be way of salary,bonus, commission, fee or any other remuneration.

Meaning of substantial interest1 . In case of company- a person having at least

20% of equity shares carrying voting rights2. In other cases- a person entitled to at least

20% of the profit of the concern.


11/31

Example-

Mrs. A draws salary from BCL LTD in whichher husband is a major shareholding 20%of shares carrying voting rights. In thiscase salary received by a shall beincluded in the income of her husband.


12/31

b) if an asset (excluding house property) istransferred by an individual to his or her spouse, directly or indirectly, neither for adequate consideration nor in connection withan agreement to live part, the income from

such asset to the spouse, will be included inthe income of the transferor.(sec.64( 1 )(iv))Example- Mr. A transfers debentures of CETA LTD

worth RS.50000 to his wife b out of natural

love and affection ie.without adequateconsideration) now interest on suchdebentures accruing to b shall be included inthe total income of Mr. A.


13/31

4 .INCOME OF DAUGHTER -IN

LAW(SEC.6 4 (1)(IV))

If an individual transfersassets after 3 1 st may , 1 973, withoutadequate consideration, to his daughter -in

law (son s wife) any income arising from

such assets will be included in the totalincome of the transferor.


14/31

5 . TRANSFER OF ASSETS TO OTHER PERSONS OR ASSOCIATION OF

PERSONS FOR THE BENEFIT OF SPOUSE.(SEC.6 4 (1)(VII))if an individual transfers assets, without

adequate consideration, to some other person or association of persons for immediate or differedbenefit of his or her spouse, any income arising fromsuch assets to that person or association will beincluded in the total income of the transferor to the

extent it is for the benefit of the spouse. For instancesuppose the income from the transferred asset isRS. 1 0000 and half of this reserved for the benefit of the spouse of the transferor, then RS.50000 shall beincluded in the income of the transferor.


15/31

6. INCOME FROM ASSETS TRANSFERRED TO A PERSON OR

ASSOCIATION OF PERSONS FOR THE BENEFIT OF HIS SONS WIFE.(SEC.6 4 (1))

Any income arising to anyperson or association of persons form the assetstransferred to it by an individual after 3 1 .5. 1 973,except for adequate consideration, shall to theextent to which the income from such assets is for

the immediate or deferred benefit of his son s wife,be included in the total income of such individual or the transferor.


16/31

7. INCOME FROM BUSINESS(SEC .64 (1))

If the individual transfers anyasset directly or in directly to the spouseor son s wife such assets are invested by

the transferee:In any business, but not as capitalcontribution as a partner in a firm or being admitted to the benefits of partnership in a firm ,the amountcalculated as under will be included inthe income of transferor:


17/31

Contd

V alue of the asset transferred

by transferor on the 1 st day of P.Y

profit share of transfereefrom businessTotal investment on the 1 st day

of P.Y by transferee


18/31

8 . INCOME OF A MINOR CHILD . (SEC .64 (1A))Minor child- a minor child included a

step-child and an adopted child. Any income of a minor shall be clubbed with the

income of his or her parent. How ever, theincome of a physically or mentally handicapped

minor child shall not be included in the income of either of his or her parents. In such cases thetotal income of such minor child shall becomputed separately.

When the income of a minor child is included in theincome of parent, a parent concerned is entitledto exemption on the income so included or RS. 1 500 per minor child , which ever is lessunder section 1 0(32)


19/31

The following are the provisions for theinclusion of the income of minor child inthe income of a parent:Where the marriage of his parentssubsists, in the income of that parent

whose total income is greater;Where the marriage of his parents doesnot subsist, in the income of the parent

who maintains the minor child in the P.Y


20/31

Exceptions:The following income of minor child

shall not be included in the income of theparent:

1 . Income from manual work done by the

minor;2. Income from activity involving applicationof his skill, talent or specializedknowledge and experience.


21/31

9 . TRANSFER OF SEPARATE INDIVIDUALPROPERTY OR SELF ACQUIRED PROPERTYTO HUF OF WHICH HE IS A MEMBER ORCONVERSION OFPROPERTY .(SEC .64 (2)(A)AND(B)) .

If, after 3 1 st December 1 969, an individual transfers for inadequateconsideration or converts his self-acquired property

into the property of the HUF of which he is amember, then the income from such property shallbe deemed to be the income of the individual andnot of the HUF. It will be included in the totalincome of the individual.

Where such converted property is subsequentlypartitioned, the income from such convertedproperty received by the spouse of the individualwill be includible in the income of the individual whohas converted the property, even after partition.


22/31

10 . BENAMI TRANSACTIONS .

When a person entersinto a transaction in the name of a personother than the real person in order to avoidtax, it is called a benamy transaction, and

the person in whose name the transactionis affected is called binamdar. If in theopinion of the accessing officer, a transfer is benami, he will treat the income of that

transaction as the income of the realperson and tax shall be levied on him for that transaction. No tax shall be levied onthe benamidar for a benami transaction.


23/31

PROBLEM

1 .SELF INCOME:

A) Rental income from house property 36000

B) Income from business 202000

C) Interest on investment 1 5200

2 . WIFES INCOME :

A) Rental income from house property gifted by her father 1 0000

B) Interest on debentures gifted by her husband in 2004 7000

Particulars of income of Mr. Amarnath and his family members are

as under


24/31

3 . MAJOR SONS INCOME:

A) salary from a company 1 84000

B) Rent from house property (the house was gifted byhis father in 2000 when he is a minor.) 24000

4. MINOR SONS INCOME

A) Salary received for service in a farm 1 8000

B) Interest on F.D in a bank deposited by his father 1 2000

5 . MINOR DAUGHTERS INCOME

A) Interest on investment made by her mother indaughter s name

4000

B) Rent from house property gifted by her grant father 1 8000

Compute separately individual gross total income of the familymembers keeping in mind clubbing provisions of the income tax act.


25/31

1 . IN COME FROM HOUSEPROPERTY:Rental income from own house (A. V )Less:30% of A. V

Rental income of minor daughter (A.V

)(clubbed with father u/s 64( 1 A)) 1 8000Less:30%of A.v 5400

Less: exemption up to RS 1 500 U/S1

0(32)TAXABLE INCOME FROM H.P

2 . INCOME FROM BUSINESS

360001 080025200

1 26003 7 8 00

1 50036300202000

COMPUTATION OF G.T.I OFMR.AMARNATH


26/31

3.INCOME FROM OTHERSOURCES:

I) Interest on investment (own)II) Interest on debentures in the

name of wife (clubbed u/s( 1 )(iv)III) Interest on bank FD in the name

of minor son : 1 2000

less: exception u/s 1 0(32) 1 500IV ) Interest on investment made in

the name of minor daughter byher mother but income as it isgreater than of her mother

GROSS TOTAL INCOME

1 5200

7000

1 0500

4000

36700275000


27/31

COMPUTATION OF G .T.I OF MRS .AMAR NATH

rental income from house property giftedby her father (A. V ) 1 0000LESS: 30% of A. V 3000

GROSS TOTAL INCOME 7000


28/31

COMPUTATION OF GROSSTOTAL INCOME OF MAJOR SON1 . INCOME FROM SALARYSalary from a company2 . INCOME FROM HOUSE

PROPERTYRent being annual value 24000Less 30% of annual value 7200

GROSS TOTAL INCOME

1 84000

1 6800

200800


29/31

COMPUTATION OF GROSSTOTAL INCOME OF MINOR SON

SALARY FROM A FIRMLess deductions

GROSS TOTAL INCOME

1 8000nil

1 8000


30/31

COMPUTATION OF GROSS TOTAL INCOME OFMINOR DAUGHTER

Interest on investment made in her nameby her mother included in his father sincome

Income from house property (gifted byher grand father included in the granttotal income of father

GROSS TOTAL INCOME

Nil

NilNIL


31/31

THANK YOU THANK YOU

reshma.k roll no.40 (tax)

Documents