Section 64(1)(iv): Clubbing of income from asset transferred to spouse

By | February 16, 2016

Income from assets transferred to spouse becomes taxable under provisions of S. 64(1)(iv) as per following conditions:-

  • The taxpayer is an individual
  • He/she has transferred an asset (other than a house property)
  • The asset is transferred to his/her spouse
  • The asset is transferred without adequate consideration. Moreover there is no   agreement to live apart.

If the above conditions are satisfied, any income from such asset shall be deemed to be the income of the taxpayer who has transferred the asset.


X transfers 500 debentures of IFCI to his wife without adequate consideration. Interest income on these debentures will be included in the income of X.

When S. 64(i)(iv) is not applicable

On this basis of the aforesaid discussion and judicial pronouncements, S. 64 is not applicable in the following cases:

  •  If assets are transferred before marriage.
  • If assets are transferred for adequate consideration.
  • If assets are transferred in connection with an agreement to live apart.
  • If on the date of accrual of income, transferee is not spouse of the transferor.
  • If property is acquired by the spouse out of pin money (i.e. an allowance given to the wife by her husband for her dress and usual household expenses).

In the aforesaid five cases, income arising from the transferred asset cannot be clubbed in the hands of the transferor.


64(1)(iv)Income from assets
transferred directly or indirectly to the spouse without adequate consideration.
Individual transferring
the asset.
Clubbing not applicable if:
The assets are transferred;
1. With an agreement to
live apart.

2. Before marriage.

3. Income earned when relation does not exist.

4. By Karta of HUF gifting co-parcenary property to his wife.

L. Hirday Narain vs. ITO 78 ITR 26 (SC)

5. Property acquired out of pin money.

R.B.N.J. Naidu vs. CIT 29 ITR 194 (Nag.)

  1. Income earned out of Income arising from transferred assets not liable for clubbed.
    [M.S.S. Rajan 252 ITR 126 (Mad)]
  2. Cash gifted to spouse and he/she invests to earn interest. [Mohini Thaper vs. CIT 83 ITR 208 (SC)]
  3. Capital gain on sale of property which was received without consideration from spouse [Sevential M. Sheth vs. CIT 68 ITR 503 (SC)]
  4. Transaction must be real.
    [O.N. Mohindroo 99 ITR 583


As Per Section 64(1)(iv), of the Income Tax Act, 1961-

Income of individual to include income of spouse, minor child, etc.

64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly—

(iv) subject to the provisions of clause (i) of section 27,  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.

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