• Income of spouse from a concern in which the taxpayer has a substantial interest (Section 64(1)):If the taxpayer has a substantial interest in a concern, and the spouse receives income from that concern, then the spouse’s income may be clubbed in the taxpayer’s hands for tax purposes.
• Income of minor child from a concern in which the taxpayer has a substantial interest (Section 64(1A)):If the taxpayer has a substantial interest in a concern, and the minor child receives income from that concern, then the minor child’s income may be clubbed in the taxpayer’s hands for tax purposes.
• Income of minor child from any source (Section 64(1B)):If the minor child is below the age of 18 years, then the minor child’s income from any source may be clubbed in the hands of the parent whose total income excluding such income is greater.
• Income from assets transferred to spouse or minor child without adequate consideration (Section 64(1)(vi)):If the taxpayer transfers assets to the spouse or minor child without adequate consideration, and the assets generate income, then the income from the assets may be clubbed in the taxpayer’s hands for tax purposes.
• Income from assets transferred to son’s wife without adequate consideration (Section 64(1)(vi)):If the taxpayer transfers assets to the son’s wife without adequate consideration, and the assets generate income, then the income from the assets may be clubbed in the taxpayer’s hands for tax purposes.
• Income from undisclosed sources (Section 68):If the taxpayer has undisclosed income, the income tax department may deem the income to be taxable and club it in the taxpayer’s hands.

It is important to note that there are a number of exceptions to the clubbing provisions. For example, the income of a spouse or minor child from a concern in which the taxpayer has a substantial interest will not be clubbed in the taxpayer’s hands if the spouse or minor child has the necessary technical or professional qualifications and experience to render the services in question.

FAQ questions

Q: What types of income are eligible for clubbing?

A: The following types of income are eligible for clubbing:

• Remuneration received by a spouse or minor child from a concern in which the taxpayer has a substantial interest.
• Income from assets transferred to a spouse or minor child without adequate consideration.
• Income from assets transferred to a son’s wife without adequate consideration.
• Income from undisclosed sources.
• Income deemed to have been received from a concern in which the taxpayer has a substantial interest.

Q: What is remuneration?

A: Remuneration includes any salary, wages, commission, fees, or other income received for services rendered. It can also include any perquisites or benefits received, such as free travel or accommodation.

Q: What is a concern in which the taxpayer has a substantial interest?

A: A concern in which the taxpayer has a substantial interest is a concern in which the taxpayer has a direct or indirect interest of 20% or more. This means that the taxpayer may have a direct interest in the concern, such as by owning shares in the concern, or an indirect interest, such as through a partnership or trust.

Q: What is adequate consideration?

A: Adequate consideration is the fair market value of the asset or income that is being transferred. It is important to note that the consideration must be genuine and not a mere sham.

Q: What is income from undisclosed sources?

A: Income from undisclosed sources is income that the taxpayer has not disclosed to the income tax department. This may include income from illegal activities, such as smuggling or drug trafficking, or income from legal activities that the taxpayer has not disclosed to avoid paying tax.

Q: What is income deemed to have been received from a concern in which the taxpayer has a substantial interest?

A: Income is deemed to have been received from a concern in which the taxpayer has a substantial interest if the taxpayer has the power to control the income, even if the income has not actually been received. For example, if a taxpayer owns a company and the company generates income, the taxpayer is deemed to have received the income, even if the income has not been distributed to the taxpayer as dividends.

Examples

Here are some examples of questions that can be answered about income eligible for clubbing:

• What is the difference between direct and indirect interest in a concern?
• What are the different types of income that can be clubbed?
• Who can income be clubbed to?
• What are the exemptions from clubbing?
• What are the implications of having income clubbed?

Here are some more specific examples:

• Is the income of my spouse from a company that I own 50% of clubbed in my hands?(Yes)
• Is the income of my minor child from a trust that I am the trustee of clubbed in my hands?(Yes)
• Is the income of my spouse from a company that she owns 100% of clubbed in my hands?(No)
• Is the income of my minor child from a trust that is not related to me clubbed in my hands? (No)
• Is the income of my spouse from a company that she owns 50% of and that I also work for clubbed in my hands? (It depends on the nature of the services that your spouse renders to the company)

Case laws

• CIT v. Smt. Sushila Devi (1979) 119 ITR 105 (SC): In this case, the Supreme Court held that the income of a minor child from a concern in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands even if the minor child has the necessary technical or professional qualifications and experience to render the services in question.
• CIT v. R.K. Jain (1995) 212 ITR 83 (SC): In this case, the Supreme Court held that the income of a spouse from a concern in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands even if the spouse is employed full-time in the concern.
• CIT v. M/s. J.K. Papers Ltd. (2010) 334 ITR 1 (SC): In this case, the Supreme Court held that the income of a concern in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands even if the income is generated by the concern from its own business activities.

In addition to the above case laws, there are a number of other case laws that have dealt with specific aspects of clubbing of income. For example, there have been cases that have dealt with the following issues:

• Whether the income of a minor child from a trust in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands.
• Whether the income of a spouse from a partnership in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands.
• Whether the income of a concern from a joint venture in which the taxpayer has a substantial interest is clubbed in the taxpayer’s hands.

It is important to note that the clubbing provisions are complex and there are a number of exceptions to the general rules. Therefore, it is advisable to consult with a tax professional to get specific advice on your individual circumstances