Income from assets transferred to a person for the benefit of spouse attract the provisions of S. 64(1)(vii) on clubbing of income, if-
- The taxpayer is an individual.
- He/she has transferred an asset to a person or an association of persons.
- Asset is transferred for the benefit of spouse.
- The transfer of asset is without adequate consideration.
In case of such individuals income from such an asset is taxable in the hands of the taxpayer who has transferred the asset.
CLUBBING PROVISIONS AT A GLANCE:
| SECTION | NATURE OF TRANSACTION | CLUBBED IN THE HANDS OF | CONDITIONS/EXCEPTIONS | RELEVANT REFERENCE |
| 64(1)(vii) | Transfer of assets by an individual to a person or AOP for the immediate or deferred benefit of his: (vii) – Spouse. | Individual transferring the Asset. | Condition: 1. The transfer should be without adequate consideration. | 1. Transferor need not necessarily have taxable income of his own. [P. Murugesan 245 ITR 301 2. Wife means legally wedded |
Reference:
As Per Section 64(1)(vii), 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—
(vii) to any person or association of persons from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse.