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CMA Intermediate · Direct and Indirect Taxation · Clubbing of Income

Mr. Eswaran's minor daughter suffers from a disability of the nature specified in section 154. She earned Rs 60,000 interest on a deposit made from gifts. Under section 99(1)(c), the treatment of this interest in Mr. Eswaran's total income is:

The interest is not included in Mr. Eswaran's total income. Section 99(1)(c)(iii) excludes the income of a minor child who suffers from a disability of the nature specified in section 154, even where the income arises from assets and would otherwise be clubbed.

  1. AIncluded fully, as interest arises from an asset
  2. BIncluded only if Mr. Eswaran has the higher income of the two parents
  3. CNot included, as the minor child suffers from the specified disabilityCorrect
  4. DIncluded to the extent of 50% only

Explanation

Section 99(1)(c)(iii) excludes from clubbing the income of a minor child suffering from disability of the nature specified in section 154. This applies irrespective of whether the income comes from work or from assets, so the Rs 60,000 interest is not clubbed with the parent's income.

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