SHRI RAMSWAROOP MEMORIAL UNIVERSITY
SUBJECT- LAW OF TAXATION
TOPIC- ASSIGNMENT ON CLUBBING OF INCOME
SUBMITTED TO- MR.
KAUSHALENDRA SINGH
SUBMITTED BY-
NAME- Abhishek tripathi
COURSE- BALLB (H)/8TH SEMESTER
ROLL NO.- 201610301140004
CLUBBING OF INCOME
Inclusion of others Incomes in the income of the assessee is called Clubbing of Income and the
income which is so included is called Deemed Income. It is as per the provisions contained in
Sections 60 to 64 of the Income Tax Act.
Objective –Main Objectives are as follows:-
• Circumstances when income of some other person is included in the income of Assessee
• Provisions when these sections will be applicable
• Under what head and in whose income it will be included.
SECTION 60 : TRANFER OF INCOME WITHOUT TRANSFER OF ASSET
Section 60 is applicable if the following conditions are satisfied:
• The taxpayer owns an asset
• The ownership of asset is not transferred by him.
• The income from the asset is transferred to any person under a settlement, or agreement.
• If the above conditions are satisfied, the income from the asset would be taxable in the hands
of the transferor.
SECTION 61 : REVOCABLE TRANSFER OF ASSETS
‘Revocable transfer, means the transferor of asset assumes a right to re-acquire asset or income
from such an asset, either whole or in parts at any time in future, during the lifetime of
transferee. It also includes a transfer which gives a right to re-assume power of the income from
asset or asset during the lifetime of transferee.
If the following conditions are satisfied section 61 will become applicable.
• An asset is transferred under a “revocable transfer”,
• The transfer for this purpose includes any settlement, or agreement
Then any income from such an asset is taxable in the hands of the transferor and not the
transferee (owner).
SECTION 62: TRANSFER IRREVOCABLE FOR A SPECIFIC PERIOD
• Where the income arises to any person by virtue of transfer by way of trust which is not
revocable during the life time of the beneficiary, and in case of any other transfer which is not
revocable during the life time of the transferee.
• Where the income arises to any person by virtue of transfer made before 01.04.1961, which is
not revocable for the period of 6 years or more
SECTION 63: TRANSFER AND REVOCABLE TRANSFER DEFINED
For the purposes of Section 60, 61 and 62 and of this section-
• A transfer shall be deemed to be revocable if-
1. It contains any provision for the retransfer directly or indirectly of the whole or any
part of the income or assets to the transferor, or
2. “Transfer” includes any settlement, trust, covenant, agreement or arrangement.
It, in any way, gives the transferor a right to re-assume power directly or indirectly over the
whole or any part of the income or assets
SECTION 64(1)(ii) : WHEN AN INDIVIDUAL IS ASSESSABLE IN
RESPECT OF REMUNERATION OF SPOUSE
The following incomes of the spouse of an individual shall be included in the total income of the
individual:
(i) Remuneration from A Concern In Which Spouse Has Substantial Interest [Sec 64 (1) (ii)]
If the following conditions are fulfilled this section becomes applicable.
• If spouse of an individual gets any salary, commission, fees etc. (remuneration) from a concern
• The individual has a substantial interest in such a concern
• The remuneration paid to the spouse is not due to technical or professional knowledge of the
spouse.
• Then such salary, commission, fees, etc shall be considered as income of the individual and not
of the spouse. Illustration
X has a substantial interest in A Ltd. and Mrs. X is employed by A Ltd. without any technical or
professional qualification to justify the remuneration. In this case, salary income of Mrs. X shall
be taxable in the hands of X.
• When both husband and wife have substantial interest
• Where both the husband and wife have a substantial interest in a concern and both are in receipt
of the remuneration from such concern both the remunerations will be included in the total
income of husband or wife whose total income, excluding such remuneration, is greater.
SECTION 64(1A): INCOME OF MINOR CHILD
All income which arises or accrues to the minor child shall be clubbed in the income of his
parent (Sec. 64(1A), whose total income (excluding Minor’s income) is greater. However, in case
parents 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. When Section 64(1A) is not applicable
In case of income of minor child from following sources, the income of minor child is not
clubbed with the income of his parent.
• Income of minor child on account of any manual work.
• Income of minor child on account of any activity involving application of his skill, talent or
specialized knowledge and experience.
• Income of minor child (from all sources) suffering from any disability specified u/s 80U.
