CA Intermediate · Taxation · Income of Other Persons included in Total Income of Assessee
Dr. Sunita, a resident individual, transferred a house property to a trust in tax year 2026-27 with a condition that the income from the property shall be applied for the benefit of her son's wife, Pooja. The transfer is revocable only with Sunita's consent. Net rental income from the property is Rs 2,40,000. How is the income taxed?
The income is clubbed in Dr. Sunita's hands. A transfer of an asset without adequate consideration for the benefit of the son's wife, directly or through a trust, makes the income from that asset taxable in the transferor's total income, so Rs 2,40,000 is added to hers.
- ATaxable in the trust's hands only
- BTaxable in Pooja's hands as the beneficiary
- CClubbed in Dr. Sunita's handsCorrect
- DExempt as income of a private trust
Explanation
Where a person transfers an asset for the immediate or deferred benefit of her son's wife, without adequate consideration, the income from the asset is clubbed in the transferor's hands. The transfer to a trust for the benefit of the daughter-in-law attracts this rule, so Rs 2,40,000 is clubbed with Dr. Sunita. Option B wrongly taxes the beneficiary.
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