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CA Intermediate · Taxation · Income of Other Persons included in Total Income of Assessee

Meera, a resident individual, transferred a house property she owned to her sister-in-law (husband's brother's wife) for no consideration on 1 April 2026. Rent of Rs 1,80,000 was received by the transferee during tax year 2026-27. Which statement is correct regarding clubbing of this income in Meera's hands?

The rent is not clubbed in Meera's income. The clubbing rule for transfers without adequate consideration covers only the spouse and the son's wife (and certain related arrangements). A husband's brother's wife falls outside these categories, so the transferee alone is taxed on the Rs 1,80,000 rent.

  1. ARs 1,80,000 is clubbed because the transfer was without consideration
  2. BRs 1,80,000 is not clubbed because a sister-in-law is not covered by the clubbing provision on transfers without adequate considerationCorrect
  3. CRs 90,000 is clubbed, being half the rent
  4. DRs 1,80,000 is clubbed only if the transferee has no other income

Explanation

The clubbing provision for gratuitous transfers applies to a spouse, son's wife, or specified persons or entities like an AOP for the benefit of spouse or son's wife. A husband's brother's wife is not covered, so no clubbing arises. The option claiming full clubbing wrongly treats every gratuitous transfer as clubbable.

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