By the virtue of section 64(1)(viii) where an individual (assessee) has transferred an asset to any person or AOP (association of persons) for the benefit of his or her son’s wife without any adequate consideration then the income deriving or the profit generated from such transferred asset shall be taxable income of that individual (assessee).
Section 64(1)(viii) of the Income Tax Act, is applicable if the following conditions are satisfied—
If the aforesaid conditions are satisfied, then the income arising from the said transferred asset to the extent of such benefit is clubbed in the income of the person (taxpayer) who has transferred the asset.
For instance, Amit is a resident of the UK and his son Sumit stays in Mumbai along with Sweta (Wife of Sumit). Amit transfers an asset worth rupees 10 lakhs without adequate consideration to Anand and in return Anand will rent out the asset and the rent will be transferred to Sweta (wife of Sumit). The rental income deriving from the asset will be clubbed in the income of Amit.
The provision of clubbing under this section is applicable only if the transferor (assessee) is an individual (i.e., husband or wife). If the transferor is a person other than an individual then the above provisions shall not be applicable.
|S. No.||Provisions of Set of and Carry Forward of Losses under Income Tax Act, 1961|
|1||Clubbing of Your Income with Income of your Spouse|
|2||Clubbing of income from assets transferred to Son’s Wife|
|3||Clubbing of income from the asset transferred to Spouse|
|4||Clubbing of Income on Revocable Transfer of Asset|
|5||Clubbing of remuneration income of Spouse from a Concern in which other Spouse has Substantial Interest|
|6||Set Off & Carry Forward of Loss under the head House Property|
|7||Clubbing of income of a Minor Child with Income of parent|
|8||Clubbing of Income from Self-acquired Property converted to Joint Family Property & subsequent Partition|
|9||Clubbing of Income from assets transferred to a person for benefit of spouse|
|10||Clubbing of Income from Assets Transferred to a Person for the Benefit of Son’s Wife|
|11||Carry forward & set off of Business Losses other than Speculation Loss|
|12||Set off and Carry Forward of Capital Loss|
|13||Set-off and carry forward of Speculative Business Loss|
|14||Set-off & carry forward of Loss from owning & maintaining racehorses|
|15||Set off and carry forward of losses of Specified Business | Section 73A|