Skip to content

CMA Intermediate · Direct and Indirect Taxation · Clubbing of Income

Mr. Bhatia and Mrs. Bhatia are divorced, so their marriage does not subsist. Their minor daughter lives with and is maintained by Mrs. Bhatia during the tax year. Mr. Bhatia's total income is Rs 14,00,000 and Mrs. Bhatia's is Rs 5,00,000. The daughter earns Rs 30,000 interest on a deposit. In whose hands is this interest included?

The interest is included in Mrs. Bhatia's total income. When the parents' marriage does not subsist, the minor's income is clubbed with the parent who maintains the child during the tax year, and the comparison of the parents' incomes is irrelevant.

  1. AMr. Bhatia, as his total income is greater
  2. BMrs. Bhatia, as the parent who maintains the childCorrect
  3. CSplit equally between both parents
  4. DNot clubbed with either parent

Explanation

Section 99(5)(b)(ii) provides that where the marriage of the parents does not subsist, the child's income is included in the income of the parent who maintains the child during the tax year. Mrs. Bhatia maintains the daughter, so Rs 30,000 is clubbed with her income regardless of the higher income of Mr. Bhatia.

Did you get it right without looking?

One question tells you little. A timed set on Clubbing of Income shows your real accuracy, how long you take and where you lose marks.

Practise Clubbing of IncomeFree diagnostic mock

More Clubbing of Income questions