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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Caselet: Mr. Sunil Mehta, a resident individual, owns a house property gifted to his wife Neha without consideration. Neha lets it out and receives net annual rental income of Rs 1,80,000. She also earns Rs 60,000 from a business she runs using her own funds and skills. Mr. Mehta's total income is higher than hers. What amount is added to Mr. Mehta's total income on account of clubbing?

Rs 1,80,000 is added to Mr. Mehta's income. Rental income from a house gifted to the spouse without consideration is clubbed with the transferor, while Neha's Rs 60,000 business income from her own funds and skills remains taxable in her own hands.

  1. ARs 2,40,000
  2. BRs 60,000
  3. CNil, since the house belongs to Neha
  4. DRs 1,80,000Correct

Explanation

Income from a house property transferred to the spouse without adequate consideration is clubbed with the transferor, here Rs 1,80,000. The business income from Neha's own funds and skills is her own and not clubbed. Adding both gives Rs 2,40,000 which is wrong.

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