CMp.

9 Income of Other Persons Included In Assessee's Total Income 441

Onf rSt
? , 1,60,000 Nil
3,40.000 @l0% 34,000
° 3,00,000 @20% 60,000
°"ba'anCC 80,000 @30% 24,000
1,18,000
Add: Education cess & SHEC @ 3% 3,540
1,21,540
If he can divide this income in the hands of four persons related to him, the tax liability on ^2,20,000
for each person would be as under:

Onfirst
1,60,000 Nil
On balance 60,000 @10% 6,000
Education cess & SHEC @3% 180
6,180
Total tax liability of four persons (6,180 x 4) 24,720
It may, therefore, be observed that by diverting the income into different hands, he is able to make a
substantial reduction in the tax liability. In order to curb such practices of tax avoidance, provisions have
been incorporated in the Income-tax Act under which the income arising to certain persons is to be
included in the income of another person, for purposes of computation of his tax liability. These
provisions are contained in sections 60 to 64 of the Income-tax Act.
These provisions are of 2 types:
(A) Income of other persons included in an assessee’s total income [Sections 60 to
63] ; or
(B) Income of other person included only in the individual’s total income [Section
64]
(A) Income of other persons included in the assessee’s total income
9.1 Transfer of income where there is no transfer of assets [Section 60]
Where there is a transfer of an income by a person to another person, without the transfer of the asset
from which the income arises, such income shall be included in the total income of the transferor, whether
such transfer is revocable or not and whether this transfer is effected before or after the commencement of
the Income-tax Act, 1961. For example X who owns a house which fetches a rent of ? 10,000 per month,
declares that henceforth the rent shall belong to his friend Y but the house shall remain the property of X. In
this case because there is only a transfer of income without the transfer of the asset, the rental income shall
be included in the income of X for purposes of computing his total income.
9.2 Revocable transfer of assets [Section 61]
Where there is a revocable transfer of an asset by a person to another person, any income
arising/derived from such assets shall be included in the total income of the transferor.
Transfer for sections 60, 61 and 62 includes any settlement, trust, covenant, agreement or arrangement.
I
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 442 Systematic Approach to Income Tax Chap. 9

9.2a When a transfer is revocable [Section 63]: As per section 63, a transfer for the
purpose of sections 60, 61 and 62 shall be deemed to be revocable if:
(а) it contains any provision for the re-transfer, directly or indirectly of the whole or any part
of the income or assets to the transferor, during the life time of the beneficiary or the
transferee as the case may be, or
(б) it gives the transferor a right to re-assume power directly or indirectly over the whole or
any part of the income or assets during the life time of the beneficiary or the transferee as
the case may be.
9.2b Section 61 not applicable, if the transfer is irrevocable for a specified period
[Section 62]: As per section 62(1), the provisions of revocable transfer, discussed in section 61,
shall not apply in certain circumstances. Such circumstances are—
(a) in the case of transfer by way of trust, the transfer is not revocable during the life time of
the beneficiary,
(b) in the case of any other transfer, the transfer is not revocable during the life time of the
transferee',
(c) in case the transfer is made before 1-4-1961, the transfer is not revocable for a period
exceeding 6 years.
The above exceptions are applicable provided the transferor derives no direct or indirect
benefit from such income.
In the above cases, the income shall be taxable in the hands of the transferee.
Although in case of transfer mentioned as per section 62 in clauses (a), (o) and (c) above, the income from
such assets transferred shall not be taxable in the hands of transferor as it is not treated as revocable transfer,
but it will be chargeable to income-tax as the income of the transferor as and when the power to revoke the
transfer arises and shall then be included in his total income. [Section 62(2)]
Example: R transfers his house property to a trust for the benefit of G till his death. In this
case, this transfer is irrevocable till the death of G. Thus, till the death of G, the income from this
house property shall be taxable in the hands of the transferee i.e. the trust. However, on the death of
G, the income from such house property shall be included in the total income of R as on that date
the transfer has become revocable.
In the above case, if R had reserved a right to get back the house property or income therefrom
from G during the lifetime of G, then, such transfer shall be revocable and income from such house
property shall be taxable in the hands of R right from the beginning.
(B) Income of other persons included only in the
individual’s total income
9.3 Income of an individual to include income of spouse, minor child, etc. [Section 64] 9.3a
Remuneration of spouse from a concern in which the other spouse has substantial interest
[Section 64(l)(/z)]: In computing the total income of an individual, there shall be included all such
sums as arise directly or indirectly to the spouse, of such individual by way of salary, commission,
fees or any other form of remuneration, whether in cash or in kind from a concern in which such
individual has a substantial interest.
Therefore, any remuneration derived by a spouse from a concern in which the other spouse has
a substantial interest, shall be clubbed in the hands of the spouse who has a substantial interest in
that concern. Any other income, not specified above, is outside the scope of this section and will not
the clubbed even if it accrues to the spouse from a concern in which the individual has a substantial
interest.

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Chap. 9 Income of Other Person lnduded in Assesseds Tolal lncome 443
TlwproXfonsofthis^hZ'stannot5“T ‘ech.nical or P™fessional qualifications: * p not aPPly to any income arising to
the spouse:
and ^ ’ ^ professional qualifications possessed by the spouse,
teC n ca or

^fpcc£»mGi tS S0^- attributable to the application of his/her technical or professional knowledge or

experience.
For example X is a partner in a partnership concern and is entitled to 50% share of the pro i o e \rm.
Mrs. X is employed as the General Manager of the firm and is getting a sa ary o >000 per month. The
taxable salary of Mrs. X will be clubbed with the to income o X under the head 'Income from salaries'.
However, if Mrs. X is receiving t e salary on account of her technical or professional knowledge or
experience, then the salary' would not be clubbed.
Where both husband and wife have substantial interest and both are getting remuneration from the
concern: If the husband and wife both have substantial interest in the concern and both are in receipt of
remuneration from the concern, then the remuneration of both shall be clubbed in the hands of that spouse
whose total income, before including such remuneration, is greater. In this case, the clubbing will be done
for the first time in the previous year in which the following three conditions are satisfied:
(a) Both the husband and wife have a substantial interest in the concern.
{b) Both the husband and wife get remuneration from such a concern.
(c) The relationship of husband and wife subsists at the time of accrual of such income.
Where such income is once included in the hands of either spouse, any such income arising in any
succeeding year shall not be included in the total income of other spouse unless the Assessing Officer is
satisfied, after giving that spouse an opportunity of being heard, that it is necessary so to do.
Meaning of substantial interest
An individual shall be deemed to have a substantial interest in the concern'.
(f) if the concern is a company: he alone or along with his relatives at any time during the previous year
owns beneficially, shares, (not being shares entitled to a fixed rate of dividend whether with or
without a further right to participate in profits) carrying not less than 20% of the voting power.
Thus shares here would mean equity shares.
Relative means the husband, wife, brother or sister or any lineal ascendant or descendant of the
individual.
(if) in any other case: if he alone or along with his relatives is entitled to at least 20% of the profits of
such concern at any time during the previous year.
The main criteria to be applied tor the purpose of substantial interest in a company is the beneficial
ownership and not the legal ownership. Therefore, the registered holder of even 51% of the equity shares
would not be considered to have substantial interest, if he has no beneficial interest in the shares. On the
other hand, if a person is beneficially entitled to 20% or more of the equity share capital of the company,
he would be considered to have substantial interest, even if he is not the registered holder of any shares.

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 444 Systematic Approach to Income Tax Chap. 9

The clubbing provisions will be applicable and Total Income of X and Mrs. X wi|] be
determined as under:
?
Mr. X
Other Income 1,80,000
Income from Salary (Salary of Mrs. X) 30,000 2,10,000
Mrs. X
Total Income _________ 2,20,000
It may be noted that clubbing in the above case is mandatory, even if such clubbing in some case
results into benefit to the assessee and loss to revenue.
Example 2: Suppose A & Mrs. A, whose other incomes are ? 1,60,000 & ? 1,80,000,
respectively, are both employed in X Ltd and getting remuneration of T10,000 p.m. and ?8,000 p.m.,
respectively. Their shareholding in the company along with relatives are Mr. A-10%, Mrs. A-5%, Mr.
A's brother-6%, Mrs A's brother 8%.
In this case A and Mrs. A both have substantial interest in the company determined as under:
A: His own share 10% + 5% (Mrs A's share) + 6% (A's brother's share) = 21%
Mrs. A: Her own share 5% + 10% (A's share) + 8% (Mrs. A's brother's share) = 23%
Clubbing provisions shall be applicable as under:
A's Total Income

Other incomes 1,60,000

Gross total income 1,60,000

Mrs. A's Total Income
Income U/H Salary
8,000 x 12 96,000
A's Salary Income
10,000 x 12= 1,20,000 1,20,000 2,16,000

Other Income 1,80,000

Gross total income 3,96,000
How to compute salary, commission, fee or any other remuneration: For the purpose of clubbing
under section 64(1 )(/7), salary has to be computed in accordance with the provisions of sections 15 to
17.
Similarly, commission, fee or any other form of remuneration will have to be computed after
allowing relevant deductions for computing such income.
9.3b Income from assets transferred to the spouse [Section 64(l)(rv)J: In computing the total
income of an individual, all such income as arises directly or indirectly, subject to the provisions of
section 27(zj (i.e. deemed owner), to the spouse of such individual from assets (other than house
property) transferred directly or indirectly to the spouse of such individual otherwise than for
adequate consideration or in connection with an agreement to live apart shall be included.
As per this provision, if an individual transfers any asset other than house property to his/her
spouse, the income from such an asset shall be included in the total income of the transferor. This
provision is not applicable to house property because in that case the

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 S btclu
. <led in Assessee's Total Income 445
transferor is deemed to be the owner of i nroperty is taxed in the hands of the iM. r usc ProPerty and thc annual
value of the ------------------ ____^irdnsteror as per section 27.
Where a house property Is transferrod~hU—~T~ ---------------------- —-______________ » ____________
transferror shall be the deemed owner of th h ° lndlvidual ,0 his or her spouse, although the head income from house property
but if th h°USB proporty and shal1 bo subject to tax under the property, such capital gain shall first ho GrQ'S any cap',a* 9a'n on the transfer
of such house the same will be clubbed with the inc comPu,ed in the hands of the transferee and thereafter section 64(1 )(/v).
me 0 be
' transferor as per provisions of this section i.e.

The income from the transferred IT i ”

asse
ts shall not be clubbed in the following cases:
(0 if the transfer is for adequate consideration;
(n) the transfer is under an agreement to live apart;
(h'i) if the relationship of husband and wife does not exist, either at the time of rans er o such asset or at
the time of accrual of the income e.g., A makes a gift to is lancee (would be wife) then the income
arising on the amount so gifted, shall not be taxable in the hands of A, even after their marriage as
the relationship of husband and wife does not exist at the time of making the gift. Similarly, if A
makes a gift to his wife and later on A divorces his wife, income arising after such event will not
be clubbed.
1. If any property is acquired by the wife out of an allowance given by her husband for her personal expenses (called
pin money), the clubbing provisions shall not apply.
2. If the asset transferred has changed the shape and identification, then income from such
changed asset shall be clubbed. For example, if the asset originally gifted were shares, thereafter the spouse sold
the shares, and acquired house property which is later on let out, then such income from house property shall be
clubbed. [CIT v Smt Pelleti Sridevamma (1995) 216 ITR 826 (SC)]. _________________________
9.3c Income from assets transferred to son’s wife [Section 64(l)(vz)]: Any income which arises from
assets transferred directly or indirectly by an individual to his son’s wife after 1-6-1973, otherwise than for
adequate consideration, shall be included in the income of the transferor. For example, R transfers 1,000
10% bonds of ? 100 each of IDBI to his son's wife without any consideration. IDBI declares ? 10,000 as
interest. Although the sum of ? 10,000 as interest is received by his son's wife, this amount shall be included
in the income of R under the head 'Income from Other Sources' for the purpose of computing his total
income.
9 3d Income from assets transferred to any person for the benefit of the spouse of the transferor
[Section 64(l)(vz7)]: Where an individual transfers any assets to any person or association of persons,
otherwise than for adequate consideration, the income from such assets shall be included in the income of the
transferor to the extent to which the mXTfor the immediate or defen-ed benefit of his or her spouse. In other
words, where an asset is transferred to some other person, without adequate consideration for the benefit of
the spouse of the individual as well as for some other persons income on such an asset to the extent of
benefit which accrues to the spouse, shall be included tn the total income of the individual. For example, X
transfers a house to his friend Y with a direction that 50% of the rental income is to be used for the benefi of
his wife Mrs. X and 50% for others, then the rental income to the extent of 50% shall be included in the total
income of X.
9.3e Income from assets transferred to any person for the benefit of son's wife [Section
64(l)(vzz7)]: As discussed in para 9.3c, where an individual transfers any assets, after 1st June 1973 to any
person or association of persons, otherwise than for adequate consideration’ the income from such assets
shall be included in the income of the

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 446 Systematic Approach to Income Tax Chap. 9
transferor to the extent to which the income is for the immediate or deferred benefit of his or her son's
wife. _______________________________________ _________ _____________________ __
Section 64(1)(v/7) and (viii) will be attracted if transferor makes a declaration of trust and appoints
himself as the trustee. ________________ ___________ _ ____________________________ _
9.4 Clubbing of income of a minor child [Section 64(1 A) J
In computing the total income of an individual, there shall be included all such income as arises or
accrues to his minor child. Therefore, the income of a minor child is to be clubbed in the hands of
either of his parents.
The income shall be clubbed in the hands of that parent whose total income (excluding the
income of the minor) is greater. If the marriage of his parents does not subsist, the income shall be
clubbed in the hands of that parent who maintains the minor child in the previous year.
Where any income is once included in the total income of either parent, any such income arising
in any succeeding year shall not be included in the total income of the other parent, unless the
Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary
so to do.
Where the income of a minor child has been included in the total income of a parent, such parent
shall be entitled to an exemption to the extent of such income or ? 1,500 whichever is less, in respect of
each minor child whose income is so included.
Certain incomes of minor child taxable in the hands of minor child only: The following income of
a minor shall not be clubbed and will be taxable in the hands of the minor himself:
(z) Any iqcomeof a minor child suffering from any disability of the nature specified in section 80U
like physically disabled, totally blind, etc.
(zz) Such income which accrues or arises to the minor child on account of any manual work done
by him
(zzz) Such income which accrues or arises to the minor child on account of any activity involving
application of his skills, talent or specialised knowledge and experience. ''
1. Child in relation to an individual, includes a step child and an adopted child of that individual
[Section 2(15B)]
2. Since 64(1 A) does not exclude minor married daughter, even income arising to minor married
daughter would be clubbed. However where section 27 applies, clubbing of income from
property gifted by the parent does not arise.
3. If both the parents of the minor child are not alive then the income of minor child cannot be
clubbed and the guardian of the minor child shall file the return of such income on behalf of the
minor. It may be added that it will not be included in the income of guardian, if the guardian is
not a parent.
4. Where the minor child attains majority during the previous year, then, the income till the date he
remained minor in that previous year shall be clubbed in the hands of the parent.
9.5 Income from self-acquired property converted to joint family property [Section

Where an individual, who is a member of the Hindu Undivided Family,—

(a) converts, his separate property as the property of the HUF, or
(b) throws the property into the common stock of the family, or
(c) otherwise transfers his individual property to the family,

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 cb,p.9 Total Incatne447
from such property shall

■ ■ /family property rr°pcrty °f an individual is treated/converted into

f V on ceoum of!sueh n C<,Ua'e c°"sid'">tion, the income derived by the joint fa.m was the owner nf P c’|,crly
123456
1’all be included in the total income of the individual
I from wh rf t° J self-acquired properly. For example, X owns a house pr°P rts this nrooJv aCnVCS of
’ , P annum. W.e.f. 1-4-2009, he
?< 0 000 cr

converts this property as the property of an HUF of which he is a member. Although the income shall
henceforth be received by the HUF but it shall be deemed to be the m tv. ua income o and shall be
included in computation of his total income under the head Income from House Property'.
Implication in the case of subsequent partition: Where the converted property has been the
subject matter of partition (whether partial or total) amongst the members of the family, the income
derived from such, converted property as is received by the spouse, on partition, shall be deemed to
arise to the spouse from assets transferred indirectly by the individual to the spouse and the income
from the portion, received by the spouse, shall be clubbed in the hands of the transferor. In the example
given above, if there is partition in the family and there are five members entitled to a share in the HUF
property i.e. X, Mrs. X, a minor child of X and two major sons of X assuming they decide to share the
property equally then the income from the property shall be treated as follows:
(а) Income from l/5th share of X ?12,000;
(б) Income from l/5th share of Mrs. X ?12,000 (to be clubbed with the income of X);

(c)
Income from l/5th share of minor child of X ?12,000 (to be clubbed with the income of X or
Mrs. X, whose income is higher, u/s 64(1 A). However, X can claim exemption upto ? 1,500
u/s 10(32);
(<7) Income from 2/5th share of other members shall be taxable in the hands of the major sons
individually.

IMPORTANT NOTES
2 Income is to be clubbed but income on income is not to be clubbed. It may be observed that under all the
provision discussed above, what is to be clubbed is the income arising from the assets transferred. However,
the income derived on the accretion of such property or from the accumulated income from such property
cannot be clubbed. [Sevantilal Maneklal Sheth v CIT (1968) 68 ITR 503 (SC)]. For example, X transfers 10,000
bonds of IDBI to his wife Mrs X Mrs. X receives interest of ?70,000 per annum on the bonds. This amount of ?70
000 is to be clubbed in the hands of Mr. X. However, if Mrs. X accumulates ?50,000 out of the interest income
and deposits it with the company at an interest of 10% per annum then the interest of ?5,000 per annum
received by her on the deposit will not be clubbed in the income of Mr. X. [Sevantilal Maneklal Sheth v CIT
(1965) 57 ITR 45 (Bom). Also see C/Tv MSS Rajan (2002) 120 Taxman 680 (Mad)].
3 Income includes loss. For the purpose of section 64, income includes loss. Therefore, under all the provisions
discussed above, where the income arising to one person is to be clubbed in the hands of another person, in the
event of loss, the loss shall be taken into account in
_____ computing the income of such person. ________ _____________________________________

9.6 Under which head of income will the clubbed income be assessed
As per the provisions discussed above, income of another person is to be included in the total
income of the individual. However, such an income will first be computed in the hands of the recipient
as if it was his income and such recipient will compute this income under the relevant head after
claiming exemptions/allowances/deductions permissible
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 448 Systematic Approach to Income Tax Chap. 9

under the relevant head in which it falls. Such income computed, under the relevant head will be
included in the total income of the individual under the same head of income.
9.7 Liability of person i.e. the transferee in respect of income included in the income of
another person i.e. transferor (Section 65]
Although the income from any asset transferred to certain specified persons mentioned in the
above sections of Clubbing of Income, is includible in the total income of the transferor, yet section
65 provides that the notice of demand in respect of tax on such income may also be served upon the
person to whom such asset has been transferred. On service of such notice, the transferee shall be
liable to pay that portion of the tax levied on the transferor which is attributable to the income so
included.
Illustration 9.1: Determine the Gross Total Income of X and his wife from the following particulars for the
year ending 31-3-2011:
(0 X and his wife are partners in a firm carrying on cloth business, their respective shares of profit being
778,000 and 760,000.
0’0 Their 16 years old son has been admitted to the benefits of another firm, from which he received 780,000
as his share of profit in the firm and 790,000 as interest on capital. The capital was invested out of the
minor's own funds amounting to 79,00,000.
(in) A house property in the name of X was transferred to his wife on 1-12-2010 for adequate consideration.
The property has been let at a rent of 730,000 p.m
0’v) Debentures of a company of 71,40,000 and 71,12,000 purchased two years ago are in the names of X
and his wife respectively, on which interest is receivable at 10% p.a. His wife had in the past transferred
770,000 out of her income to X for the purchase of the debentures in X's name.
(v) X had transferred 750,000 to his wife in the year 2008 without any consideration which was given as a
Ioan by her to Y. She earned 720,000 as interest during the earlier previous years which was also given
on loan to Y. During the financial year 2010-11, she received interest at 10% p.a. on 770,000.
(vz) X transferred 775,000 to a trust, the income accruing from its investment as interest amounted to 77,500,
out of which 75,000 shall be utilised for the benefit of his son's wife and 72,500 for the benefit of his
son's minor child.
Solution
Computation of Gross Total Income of X for the assessment year 2011-12
7 7
1. Income from House Property.
Rental value for 8 months (i.e., before transfer) (8 x 30,000) 2,40,000
Less: 30% as statutory deduction 72,000 1,68,000

2. Profit from Business:

(z) Share from firm (Exempt) Nil
(zz) Minor Son's share in another firm (Exempt) (zzz) Interest on Nil
minor's capital with firm
(790,000 - Exemption u/s 10(32) 71,500) 88,500 88,500.

3. Income from other Sources:

(zj Interest @ 10% on 770,000 Debentures (only one-half
of 71,40,000 were bought by own funds) 7,000
(zz) Interest received by his wife @ 10% on 750,000
(being transferred without any consideration) 5,000
(z7z) Interest on 750,000 from his trust
(Interest income utilised for the benefit of son's wife) 5,000 17,000

2,73,500
Gross Total Income

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CMp. 9 „fO,lw Persms MuiM tmi hKime
449
assessment year 2011-12
7
Rental value for 4 months (i e niw r <....
Less: 30% as statutory deduction ”nS 3°’000 * 4) I 1,20,000
36,000 84,000
Income from business:
Share from linn (Exempt)
Income from Other Sources :
Nil
'"“«t on n.120.000 10% Debenture nreest on <70,000 10"/.
Debenture in husband's name but funds invested by her 11,200
Interest on 720,000 @ 10%
7,000
(1 his interest is on accrued income of 750,000, which have
2,000 20,200
been transferred to her by the husband and interest on such accrued
income is treated as the income of the transferee, although the income
on the !S!!cGrrc^ amounts is treated as the income of the transferor as it
was transferred without any consideration.) Gross Total Income

1,04,200
1. Shares of profit from a firm, which is assessed as such, is fully exempt u/s 10(2A) in the hands of
the partners; although husband and wife may be partners in the same firm. Even in a case where
one spouse gifts some amount to the other spouse to be invested as capital in the firm, the clubbing
provisions though applicable, it will not affect the Total Income since the share of the profit is itself
exempt. However, if interest on capital contribution is received, it will be clubbed to the extent of the
amount invested as capital contribution out of the transfer made without adequate consideration.
2. Similarly, the minor son's income though clubbed, but as the share of the profit from the firm is
exempt, will not affect the Total Income.
3. Where the asset is transferred to a Trust for the benefit of son's wife, the income from such asset is
taxable in the hands of the transferor. However, income utilised for the benefit of son's minor son
shall be clubbed in the hands of that parent of the son's minor son, whose income is greater. It
shall, therefore, not be clubbed in the hands of the transferor i.e. X.
Illustration 9.2: Mrs. Satya Yadav received the following amounts during financial year
2010-11:
7
Gross Salary 5,30,000
Family Pension 710,000 x 12 1,20,000
Income of a minor child 49,000
Accumulated balance in PF of her husband after his death
1,00,000
Gratuity received after the death of husband
Calculate taxable income of Mrs. Satya Yadav and tax liability for the assessment year 2011- 1,00,000
12.
Solution
Computation of taxable income of Mrs. Satya Yadav for the assessment year 2011-12
Income from Salary
7 7
Gross salary 5,30,000
Less: Deduction Nil 5,30,000

Income from other sources

1,20,000
Family pension
15,000 1,05,000
Less: Deduction u/s 56 1/3 or 715,000 whichever is less
Income of a minor child 49,000
Less: Exemption u/s 10(32) 1,500 47,500

Gross total income 6,82,500

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 450 Systematic Approach to Income Tax
Tax payable 67,500
Add: Education cess & SHEC - @ 3% 2030
69,530
Tax rounded off
A ore.—Accumulated balance in PF and amount of gratuity received after the death of
husband is exempt from tax as it is assumed to be within the limit prescribed by section 10(10).

OBJECTIVE QUESTIONS
For Objective Type Questions refer Bharat's Practical Approach to Income Tax, Wealth Tax, CS1,
Service Tax & VAT (Problems & Solutions), 2011 edition, by the same authors.

THEORETICAL QUESTIONS
1. "An assesscc is not only liable in respect of his own incomes for tax purposes but his liability may
extend to some other incomes also". Comment on this statement.
2. What are the provisions for inclusion of income of a minor child and the wife of an assessee in his
total income?
3. Write short notes on:
(a) Clubbing of Income
(b) Aggregation of Income

PRACTICAL QUESTIONS*
I. State in whose income, the following incomes will be included:
(zj M transferred ?50.000 to his daughter-in-law in 2006 without any consideration. She received ?
12,000 as interest on this amount during the previous year.
(zzj R transferred his self-acquired property to the HUF, of which he is a member. During the
previous year 2010-11 the HUF earned an income of ?42,000 from this property.
(z’zzj R transferred his self-acquired property to the HUF of which he is a member. The HUF earns an
income of ? 42,000 per annum. During the previous year 2010-11 the HUF is partitioned and
the property is divided as under: R l/5thshare
R's minor son 1 /5th share
R's major son 1 /5th share
Mrs. R l/5thshare
R's brother l/5thshare
(zv) R transferred debentures worth ?5,00,000 to his wife on 1-4-2007. The debentures carry an
interest of 12% per annum. Mrs. R accumulates the interest of ?60,000 per annum, which she
receives on the debentures. The accumulated amount of interest of ? 1,80,000 is invested in a
fixed deposit with a bank and Mrs. R receives interest amounting to ? 15,000 on this FDR.
Ans.: (zj M (zzj R (zzzj R, ?23,700 (zv) R, ?60,000; Mrs. R, ? 15,000. [See Problem No. 9.1 of
Practical Approach]
2. R and Mrs. R submit the following particulars of their income relevant for the assessment year
2011-12:
(a) Mrs. R receives a salary of ?60,000 and taxable allowance of ?22,500 from G Ltd. in which her
father-in-law holds 25% of equity share capital and she herself holds 10% of equity capital.
(A) Mr. R receives a salary of ? 18,900 from S Ltd. in which Mrs. R, her sisters and brothers hold 21%
of equity share capital.

For solutions to these Practical Questions, refer Bharat's Practical Approach to Income Tax, Wealth
Tax, CST, Service Tax & VAT (Problems and Solutions), 2011 edition, by the same authors.

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 Income of Other Persons Included in Assessee's Total Income R is a (10% share) partner in EFG, a
partnership which is engaged in the identical to G Ltd. and receives <75,000 as salary and
451
Chap. 9 interest from the firm ouri g relevant previous year. None of the relatives of Mr. R has
any interest in t e irm. Mrs. R is employed by the firm EFG on a salary of < 15,000 per annum.
(c) on
She receives dividend of < 11,000 (Gross) from G Ltd. and <9,000 (Gross) from S . 1-7-2010. .
Interest of minor daughter of R from a partnership firm is <43,500.
(d) invente
(e) d the
Mrs. R transferred <70,000 on 15-6-2006 to her daughter-in-law, who gr_
aforesaid sums in a partnership firm at 12% p.a. Out of the interes !he°orevious year she in-law
has purchased debentures in an Indian company and during p
Mrs* R payfa rem of <15,000 for her own residence. She satisfies all other conditions for
claming deduction of such rent. . , nf her
uiaiiuixg, IQ non nn life insurance on tne me 01 uci
She pays <20,000 as insurance premium (<18,000 on me msuia
Fund account and pays ?8,000 on a life
(/)
- - _t year 20..-.3 on the

following assumptions: • . shareholder in G Ltd. throughout the previous year; and

S X Mr. R^rio"Xd. only during 15 days of the previous year (f.e. horn 1-7-2010 to 15-7-2010).
An! :
' i&e Problera No'98 of Fractical Approachl

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