Contents -

1. Transfer of income where there is no transfer of assets : Section 60.
2. Revocable transfer of assets : Section 61.
3. Transfer irrevocable for a specified period : Section 62.
4. Transfer and Revocable Transfer defined : Section 63.
5. Income of individual to include income of spouse, minor child : Section 64.
6. Liability of person in respect of income included in the income of another person : Section 65.

Introduction -

Under the Income Tax Act, generally the tax is charged on the persons income. In other words, the persons whose income is chargeable, the tax is collected from him. It means there is direct relation between Income Tax Department and the person whose income is chargeable for tax. But in the certain cases the income of the other person included in the assessee income. The provisions to the extent are in the income tax act.

Q. Explain in brief provisions of Income Tax Act,1961 regarding clubbing of income.

  • Transfer of Income where there is no Transfer of Asset. (Section 60) -
All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this act shall, where there is no transfer of the assets from which the income arises be chargeable to Income Tax as the income of the transfer and shall be included in his total income.

  • Revocable Transfer of Assets (Section 61)-
All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to Income Tax as the income of the transferor and shall be included in his total income.

  • Transfer Irrevocable for a Specific Period (Section 62) -
A) The provisions of section 61 shall not apply to any income arising to any person by virtue of a transfer :
1. Made before the 1st day of April, 1961 which is not revocable for a period exceeding six years.

2. By way of Trust which is not revocable during the lifetime of the beneficiary and in the case of any other transfer, which is not revocable during the lifetime of the transferred.

B) All income arising to any person by virtue of any such transfer shall be chargeable to Income Tax as the income of the transferor as and when the power of revoke the transfer arises and then be included in his total income.

  • Transfer and Revocable Transfer, Defined (Section 63) -
For the purpose of section 60, 61 and 62 and of this section:
A) A transfer shall be deemed to be revocable if :
1. 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.
2. 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.

B) Transfer includes any settlement, trust, covenant, agreement or arrangement.

  • Income of individual to include income of spouse, Minor child etc. (Section 64) -
A) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly :

1. Income from assets transferred without adequate consideration by an individual to his or her spouse, shall be included in the total income of such individual.

2. Salary, Commission or fees or any other form of remuneration received by the spouse from a concern in which the individual assessee has substantial interest except where the spouse processes technical or professional qualification and the income is attributable to these qualification and experience shall be included in the income of spouse having a greater income.

3. Income arising from son's wife of an individual, from assets transferred without adequate consideration by such individual to such son's wife, shall be included in the total income of such individual.

4. Any income arising or accruing to a minor child, other than minor child why is totally blind, mentally retarded for physically handicapped as specified under section 80U, shall be included in the total income of the parents whose total income is greater or where the marriage of the parents does not subsists, in the income of parent who maintenance the minor child.

5. Where any person has converted his own property into the joint family property, any income arising from such converted property, shall be assessed in the hands of the person who originally converted such property in to the HUFs property.

6. From assessment year 1993-94, income of every minor child shall be clubbed in the income of his parents.

  • Liability of Person in respect of Income included in The Income of Another Person (Section 65) - 
Where the income from any asset or from membership in a firm of a person other than the assessee, is included in the total income of the assessee. The person in whose name such asset stands or who is a member of a firm shall, (not with standing anything to the contrary contained in any other law for the time being in force), be liable, on the service of a notice of demand by the assessing officer in this behalf, to pay that portion of the tax levied on the assessee which is attributable to the income so included and the provisions, so far as may be apply accordingly.